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Agilent (A) Earnings and Revenues Beat Estimates in Q3

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Agilent TechnologiesA fiscal third-quarter 2019 earnings of 76 cents per share surpassed the Zacks Consensus Estimate by 4 cents. The bottom line increased 7% sequentially and 13% year over year.

Fiscal third-quarter 2019 revenues of $1.27 billion increased 6% year over year (up 6% on a core basis). Also, reported revenues, which came in above management’s guided range of $1.225-$1.245, surpassed the Zacks Consensus Estimate of $1.239 billion.

The year-over-year revenue growth was driven by strength in the pharma, diagnostics, environmental and forensics markets.

During the quarter, Agilent entered into a definitive agreement to acquire Winooski, VT-based BioTek Instruments, Inc., a provider of life science instrumentation, in a bid to expand presence in the life science research space.


The deal will strengthen Agilent’s offerings related to live cell analysis as these product lines aid in quantification of biomolecules, biomolecular interactions and cellular structure.

Agilent Technologies, Inc. Price, Consensus and EPS Surprise

Revenues by Segment

Agilent has three reporting segments — Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG) and Diagnostics and Genomics Group (DGG).

In the reported quarter, LSAG was the largest contributor to total revenues. The segment accounted for $544 million or 43% of its total revenues, reflecting an increase of 1% from the prior-year quarter. The demand in pharma, environmental and forensics markets was strong, offset by weakness in the food market.

Revenues from ACG came in at $467 million, accounting for 37% of total revenues, reflecting a 10% year-over-year increase, driven by growth across all regions and market segments.

Revenues from DGG came in at $263 million, accounting for the remaining 20% of total revenues. The segment’s revenues were up 11% from the year-ago quarter, led by strength in the company’s Nucleic Acid Solutions Division, diagnostics and clinical markets.

Operating Results

Gross margin in the quarter was 54.3%, down 50 basis points (bps) year over year. The decrease was due to an unfavorable product mix.

Operating expenses (research & development as well as selling, general & administrative) were $467 million, 6.6% higher than the year-ago quarter.

As a result, adjusted operating margin was 17.7%, down 70 bps from the year-ago quarter.

Balance Sheet

At the end of the fiscal third quarter, inventories totaled $660 million, up from $657 million in the prior quarter. Agilent’s long-term debt was $1.3 billion at the end of the quarter. Cash and cash equivalents were $1.8 billion compared with $2.2 billion in fiscal second-quarter 2019.

Guidance

Agilent provided guidance for the fiscal fourth quarter and revised the same for fiscal 2019.

For the fiscal fourth quarter, the company expects revenues between $1.31 billion and $1.33 billion, and earnings per share in the range of 84-86 cents. The Zacks Consensus Estimate for revenues and earnings per share is pegged at $1.34 billion and 86 cents, respectively.

For fiscal 2019, Agilent has increased the revenue projection in the range of $5.105-$5.125 billion versus the previous expectation of $5.085-$5.125 billion. Non-GAAP earnings projection is now in the range of $3.07-$3.09 per share versus the previous expectation of $3.03-$3.07.

The Zacks Consensus Estimate for earnings is pegged at $3.05 per share and the same for revenues is $5.10 billion.

Zacks Rank and Other Stocks to Consider

Currently, Agilent has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include AMETEK, Inc. AME, Teradyne, Inc. TER and eBay Inc. EBAY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for AMETEK, Teradyne and eBay is currently projected at 9.47%, 11.4% and 9.4%, respectively.

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