EUR 850.00 For Business Accounts Only

Morningstar | Agilent Posts Solid Fiscal First Quarter

We don’t anticipate a change to our fair value estimate for wide-moat Agilent as the company’s fiscal first-quarter results mostly matched our expectations. Our current revenue and earnings forecasts were previously at the high-end of management’s previous guidance, but we now sit in the middle of the company’s increased outlook, which includes between $3.03 to $3.07 in adjusted EPS for the year. However, since Agilent continues to post solid results, we wouldn’t be surprised to see further slight increases in management’s year-end goals over the coming quarters.

Agilent continues to post impressive revenue growth and margin expansion. Although it faced a large negative currency effect, the company attained 6.1% organic growth for the quarter with 120 basis points in adjusted operating margin expansion to 23.1%. The academic and government as well as chemical and energy segments posted little growth on difficult year-over-year comparisons from strong results in the prior-year period. Additionally, growth in the food segment declined 1% as the China regulatory restructuring continues, but this headwind will begin to annualize and should draw to a close. Growth in the quarter was led by the biopharma, environmental, and diagnostic customer segments all posting low-double-digit growth. While we think most of Agilent’s customer segments will post modest growth as underlying factors appear stable, we do anticipate more favorable growth in the biopharma and diagnostic segments thanks to healthy demand and Agilent’s efforts to boost its presence in higher growth categories including cell analysis, nucleic acid, diagnostic, and genome sequencing product offerings. Meanwhile, operating leverage, product mix, and efficiency improvement efforts should sustain the company’s margin expansion trajectory.