Keysight Earnings: Softer Demand Continues, and We Maintain Our Long-Term Thesis

We maintain our $157 fair value estimate for shares of wide-moat Keysight Technologies as we believe our long-term thesis is intact after the firm reported fiscal second-quarter results. Keysight continues to see weaker demand across its served markets, led by commercial communications. We expect soft results through the fiscal year and a multiyear rebound across fiscal 2025 and 2026. Fiscal second-quarter results were slightly above our expectations, while fiscal third-quarter guidance was modestly below our model. Overall, our view on Keysight’s longer-term opportunity is unchanged. We continue to see the firm as well-positioned with a comprehensive communications testing portfolio and good adjacent opportunities in cars and semiconductors. We see shares as fairly valued.