Keysight Technologies (NYSE:KEYS) shares dropped more than 10% in premarket Friday after the company offered weaker-than-expected guidance. Moreover, Barclays downgraded the stock as the results showed demand trends continue to deteriorate.
EPS came in at $2.19, better than the consensus estimate of $2.04. Revenue was flat compared with last year (up 1% on a core basis) at $1.38 billion, in line with the consensus estimates.
“Despite near-term macro challenges, Keysight’s diversified business, strong customer engagement through our differentiated solutions portfolio, and durable operating model give us confidence in our ability to capitalize on the long-term secular growth trends of our markets, as well as outperform in a variety of market conditions,” said CEO Satish Dhanasekaran.
For Q4/23, the company expects revenue in the range of $1.29B-$1.31B, below the consensus of $1.39B. Non-GAAP EPS is expected in the range of $1.83-$1.89, while the analysts were looking for $1.99.
For the full year, the company sees revenue at $5.45B and EPS at $8.19, which compares to the consensus of $5.55B on revenue of $8.18, respectively.
Barclays analysts cut the rating to Equal Weight from Overweight with a price target down by $60 to $144 per share.
"We do not expect KEYS to see a recovery in demand until 2H24, and now expect the company to not hit its long-term top-line growth outlook of 5%-7% until FY25," they said in a note.
Citi analysts lowered the price target by $26 to $174 per share but remain Buy-rated.
"We continue to like KEYS’s pricing power and high gross margin profile, which will warrant multiple expansion over time but lower estimates on modestly slower near term growth and a meaningful step up in tax rate."
(Additional reporting by Senad Karaahmetovic)