Agilent Earnings: China Challenges Cut Into Results and Guidance

Wide-moat Agilent delivered third-quarter results that were slightly better than expected, but they reflected weakness in the typically robust biopharma end market, which looks likely to continue especially in China and caused management to reduce its 2023 guidance for sales and adjusted EPS. While we have tinkered with our near-term assumptions slightly after this announcement, those changes did not change our $151 fair value estimate, especially considering that management also raised the key driver of our valuation—free cash flow—materially for 2023. Overall, we think Agilent's long-term prospects remain intact, and Agilent shares continue to represent a growth at a reasonable price opportunity.