EUR 850.00 For Business Accounts Only

Morningstar | Stable revenue growth and operating margin expansion support healthy earnings growth for Agilent.

Spun out of Hewlett-Packard in 1999, Agilent has evolved, through a series of transactions, into a leading healthcare firm. As a market share leader in many of its core product categories, especially gas chromatography and mass spectrometry, Agilent is a global measurement giant, using its technological expertise and global reach to serve a broad base of science and engineering customers. After spinning off its electronics segment in November 2014 under the name Keysight Technologies, Agilent now focuses solely on the life sciences, diagnostics, and chemical analysis markets.Agilent has leveraged its competitive edge in the electronic measurement market, emerging as a major player in the life sciences market. The spin-off of its electronics unit has allowed Agilent to focus on the chemical analysis and life science markets, which present better growth opportunities while enhancing the company’s moat through the higher barriers to entry and switching costs in these fields. Despite near-term challenges from constrained academic research budgets and weak oil and gas markets, Agilent should continue to benefit from higher growth among biopharma research and applied industrial markets. We also think management will prioritize building its diagnostics business, such as the 2012 acquisition of Dako, where the company has smaller market share and less expertise in a potentially faster-growing and larger clinical market opportunity. Agilent possesses a large global marketing and distribution infrastructure that leaves the firm well-equipped to handle competition and enhance profitability. Operating margin has methodically improved since 2009, and we see further gains ahead. Recent efficiency and cost-saving efforts--such as streamlining the supply chain, exiting its unprofitable NMR business, enhancing procurement, consolidating facilities, and outsourcing noncritical tasks--should boost profitability and make Agilent less susceptible to swings in demand than the company was a decade ago. Agilent's direct presence in emerging markets also helps solidify customer relationships, which should help enhance demand for the company’s products in these faster-growth regions.