Why Keysight Technologies Stock Is Rising Today

Keysight Technologies (KEYS 13.52%) stocks post big gains in Wednesday trading. The company’s stock price rose 12.8% as of 3:00 p.m. ET, according to data from S&P Global Market Intelligence.

After the market closed yesterday, Keysight released results for the third quarter of its current fiscal year — a period that ended July 31. better than expected.

Margin resiliency gives a big quarterly beat for Keysight

Keysight posted sales of $1.22 billion and non-GAAP (adjusted) earnings per share of $1.57. Meanwhile, the average analyst estimate called for the business to report revenue of $1.19 billion and adjusted earnings of $1.35 per share.

Even though Keysight’s revenue fell about 12% year-over-year in Q2, the decline was smaller than expected — and margins beat past expectations. Even with some headwinds, gross margin came in at 67%, only slightly lower than the 68% margin recorded in the year-ago quarter. Total costs fell slightly in the quarter, and the business posted free cash flow of $222 million — up from $196 million in the year-ago period.

What’s next for Keysight Technologies?

For the fourth quarter of its current fiscal year, Keysight is recommending sales of between $1.245 billion and $1.265 billion. Meanwhile, the average analyst estimate called for sales of $1.25 billion before the upgrade. The company also said it expects adjusted earnings per share to be between $1.53 and $1.59. The guidance range came in well above most analysts’ expectations, with the average Wall Street analyst target previously calling for adjusted earnings per share of $1.54 in the quarter.

Keysight management continues to expect orders in the second half of this year to exceed orders in the first half. The company expects the gradual recovery in demand to continue in 2025, if macroeconomic pressures do not increase.