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Will New Technologies Help Agilent (A) Beat on Q4 Earnings?

Zacks Equity Research
Updated

Agilent Technologies A is set to report fiscal fourth-quarter 2017 results on Nov 20. Last quarter, it delivered a positive earnings surprise of 13.46%.

The company’s surprise history has been pretty impressive. It beat estimates in each of the trailing four quarters, with an average positive earnings surprise of 13.98%.

Notably, on a year-to-date basis, Agilent’s shares have returned 47.8%, underperforming the industry’s gain of 49.6%.

Let’s see how things are shaping up for this announcement.

Strength in ACG Segment to Drive Revenues

In the last reported fiscal third quarter, the Agilent Cross Lab Group (ACG) segment contributed 35% of total third-quarter revenues, reflecting an increase of 7% year over year. The figure is expected to further increase in the upcoming quarter, driven by strength in services and consumables across all geographical regions. The Zacks Consensus Estimate for the upcoming quarter is pegged at $392 million.

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Strength in DGG & LSAG a Big Positive

In the last quarter, revenues from Diagnostics and Genomics Group (DGG) came in at $197 million. The segment was up 9% year over year, driven by strength in pharma, diagnostic and clinical end-markets. All businesses under this group (Dako, Genomics and Nucleic Acid Solutions) performed well. The segment is expected to perform well in the upcoming quarter too. The Zacks Consensus Estimate for the fiscal fourth quarter is pegged at $207 million.

Also, the Life Sciences & Applied Markets Group (LSAG) segment is expected to perform well in the upcoming quarter driven by strong performances in chemical and energy, pharma and environmental markets. The Zacks Consensus Estimate for the fiscal fourth quarter is pegged at $569 million.

Other Growth Drivers

Agilent Technologies is a broad-based OEM of test and measurement equipment. The company has shifted its focus to life sciences, genomics, diagnostics and wireless test markets, in which it has made a few important acquisitions and alliances.

Agilent’s broad-based portfolio and increased focus on segments offer higher growth potential. The company’s decision to divest/wind up underperforming businesses has enhanced its focus on the new Agilent, while enabling expansion of a solid recurring revenue base and diversification of geographic and industrial operations for growth. Also, the company’s focus on aligning investments toward more attractive growth avenues and innovative product launches is a positive.

The company’s solid market position, acquisition strategy and increased focus on segments with growth potential remain major growth drivers.

What Our Model Suggests

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if these have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Agilent Technologies has a Zacks Rank #3 and an Earnings ESP of +0.71%, a combination that suggests that the company is likely to beat estimates this time around.

Agilent Technologies, Inc. Price and EPS Surprise

 

Agilent Technologies, Inc. Price and EPS Surprise | Agilent Technologies, Inc. Quote

Other Stocks to Consider

We see a likely earnings beat for each of the following companies.

NVIDIA Corp. NVDA, with an Earnings ESP of +1.18% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Texas Instruments Incorporated TXN with an Earnings ESP of +0.42% and a Zacks Rank #2.

Adobe Systems Incorporated ADBE with an Earnings ESP of +0.10% and a Zacks Rank #1.

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