Deutsche Bank Upgrades Keysight Technologies (KEYS) to Buy

September 19, 2016 6:55 AM EDT
Get Alerts KEYS Hot Sheet
Price: $36.30 +0.39%

Rating Summary:
    2 Buy, 2 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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Deutsche Bank upgraded Keysight Technologies (NYSE: KEYS) from Hold to Buy with a price target of $33. Analyst Vijay Bhagavath sees 2017 growth drivers.

"We are upgrading KEYS from HOLD to BUY and raising our PT from $25 to $33 on our modestly higher FY17/18 estimates ($33 is ~12x P/E DB FY18e). Our research notes potential for KEYS to drive above consensus topline and earnings growth in FY17+. Our overweight thesis calls for gradual improvements in the spending environment for R&D Test and Measurement over the next few years, driven by growth opportunities in Modular Test, 5G Wireless, Cloud Infrastructure, and Aero + Defense. KEYS has a sticky customer base; we anticipate modest share gains versus peers, over the next few years, based on new product launches and design wins," said Bhagavath.

The analyst added, "While we are cognizant of uneven demand trends in global macro, we are upgrading KEYS to BUY based on positive thematic demand trends (5G R&D, 100/400G optical, new Aero and Defense programs, etc) driving growth in FY17+. We have a positive view on KEYS competitive position and structural improvements in the product mix towards higher margin software. Our $33 PT is derived using DCF {3% long term growth rate, and change in WACC from 11% to 10.5% after adjusting beta to reflect peers}. Key risks: 1) macro uncertainties driving weakness in R&D and business capex; 2) Q/Q volatility."

For an analyst ratings summary and ratings history on Keysight Technologies click here. For more ratings news on Keysight Technologies click here.

Shares of Keysight Technologies closed at $29.25 yesterday.

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