Why Keysight Technologies Inc (NYSE: KEYS) stock is going gangbusters

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Keysight Technologies Inc (NYSE: KEYS) stock surged over 6.2% in the pre-market session of 25th Feb, 2020 (Source: Google finance) after the company posted better than expected results for the first quarter of FY 20. Keysight has reported the net profit of $163 million compared to $114 million, in the first quarter of 2019. The ongoing strength in 5G-related investments and Keysight’s leading solutions across the ecosystem resulted in significant increase in 5G orders and continued growth in Commercial Communications. The company has achieved record first quarter orders that grew 12% year-over-year.

Moreover, during the first quarter, the company had integrated the Ixia Solutions Group, ISG, into the Communication Solutions Group to accelerate solution synergies and the teams are already getting very good traction. For the second consecutive quarter, orders for Ixia Solutions grew double-digits as the company saw continued strength in network visibility and 400-gigabit Ethernet investment in Layer 2/3 protocol solutions. Ixia and the other commercial communications acquisitions such as Anite, AT4 and PRISMA enable the company to provide the customers with a broad and differentiated set of solutions that span the stack layers as 5G evolves over the years to come. Further, In Aerospace Defense and Government, the company’s revenue grew double digits to achieve a first quarter record with broad base strength across all regions. In automotive and energy, revenue increased by high single digits with increasing customer demand for key strategic applications. In Semiconductor Measurement Solutions, the company has achieved strong order and revenue growth is due to customer strategic investments in next-generation process readiness.

KEYS in the first quarter of FY 20 has reported the adjusted earnings per share of $1.26, beating the analysts’ estimates for the adjusted earnings per share of $1.08, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 9 percent to $1.1 billion in the first quarter of FY 20, beating the analysts’ estimates for revenue of $1.06 billion. First quarter revenue performance was driven due to strong performance in Commercial Communications, Aerospace, Defense and Government, and Semiconductor Measurement Solutions. For Q1, the company has reported record gross margin of 65% and an operating expenses of $433 million.

Additionally, during the quarter, the company has acquired approximately 730,000 shares on the open market at an average price of $102.48 for a total consideration of $75 million.

The company projects the fiscal second-quarter sales to be in the range of $1.138 billion and $1.178 billion, and adjusted EPS is expected to be in the range of $1.28 a share and $1.38 a share.

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