Agilent (A) Gains on Another Beat-and-Raise Quarter, Analysts Raise Price Targets After Witnessing 'Big Boy Numbers'
Shares of Agilent (NYSE: A) are up over 3% in early Wednesday trading after the company delivered a beat-and-raise quarter.
The analytical laboratory instrument manufacturer reported a profit of $216 million, or 70 cents per share, for the quarter. Earnings per share on an adjusted basis stood at 97 cents for the period. The report beat analysts’ earnings expectations of 82 cents per share.
Revenue came in at $1.53 billion for the quarter, against analysts’ estimates of $1.39 billion.
“The Agilent team delivered an exceptional quarter, exceeding our revenue and earnings expectations as our growth momentum continues,” said Mike McMullen, Agilent president and CEO.
“Our very strong growth is broad-based across all end-markets, geographies and business groups. These results reflect our relentless customer focus, innovative solutions, and excellent operational execution. Due to our strong-second quarter performance and expected continued momentum, we are raising our revenue and earnings outlook for the full year. We also welcomed the Resolution Bioscience team to Agilent in Q2, continuing our investment in high-growth markets as part of our ‘build and buy’ growth strategy.”
The company expects earnings per share to land between 97 cents and 99 cents for the quarter that ends in August. As for the revenue outlook, Agilent expects it to range between $1.51 billion and $1.54 billion for the fiscal third quarter, compared to analysts’ estimates of $1.4 billion.
The company estimates full-year earnings to range between $4.09 and $4.14 per share, with revenue ranging from $6.15 billion to $6.21 billion.
Dan Leonard, a senior equity analyst at Wells Fargo, says investors “underappreciate” the company's long-term opportunity. He rates the stock as “Overweight” with a price target now hiked to $150.00 per share from $140.00 per share.
“Agilent reported F2Q21 earnings ahead of expectations on stronger than expected growth and margin performance in the quarter. Demand was broad based across end markets, geographies and businesses, but clear standouts continued to be biopharma (~40% growth). Management expects continued sequential improvements in end markets that have yet to recover fully in the back half of the year, and some not to fully recover until FY22,” Leonard said in a note.
“Management reiterated expectations laid out in their Dec '20 investor day, and even hinted they expect potential temporary upside to their framework for margin accretion in FY21 and stacked growth in FY22. While these breakouts are encouraging our assumptions over the longer term remain tethered to the companies guided earnings growth algorithm; modeling on average ~80bps of operating margin expansion and ~6.7% organic growth from FY19-FY23.”
The company delivered “big boy numbers” and “crushed it” says Jefferies analyst Brandon Couillard, who raised the price target to $155.00 per share from $150.00 on the Buy-rated stock.
“A shot the lights out (again) as vastly stronger core growth (+19% vs +10% cons) & better margins drove material EPS upside (+14c / +17%). Guidance moved up by much more than the 2Q beat, signaling a high level of confidence in sustained momentum into 2H. Mgmt was upbeat on its ability to still drive +DD EPS growth in '22, despite tough comps. A's strong execution, best-in-class growth & BS optionality justify a premium. We con't to like the stock,” the analyst says in a note.
Looking to FY22, the analyst comments that management was “confident in its ability to deliver +DD EPS growth next yr (barring any major tax changes), despite tough comps.”
“More broadly, A is capitalizing on accelerated market demand recovery, but also seems to be gaining share on top of that. Pent-up demand (e.g. gov't/academic) is a smaller driver of its recent growth acceleration, whereas pharma/ biotech (A's largest market) is likely to register structurally higher growth post-pandemic. A is executing well on its "build & buy" growth strategy (cell analysis) and its strong BS (only 1x net debt) offers add'l upside optionality.”