Stifel Initiates Coverage On Keysight Technologies

Stifel initiated coverage on Keysight Technologies Inc (NYSE: KEYS) Tuesday with a Hold rating.

Analyst Patrick Newton noted that the stock has “(1) significant cash generation...(2) a leading market position in every end market it targets, (3)...history of innovation and strong client mindshare are impressive, and (4) strong operating margin.”

The downside according to the analyst report was “(1) a mature, cyclical Test & Measurement (T&M) industry...(2) our analysis indicates Keysight has underinvested over a multi-year period...(3) Keysight is well behind the market leader in modular instrumentation – the fastest growing segment of T&M."

The report concluded that “Keysight’s revenue growth and GM percentage profile will trail industry peers, with shares appearing fairly valued at current levels.

"Despite expectations of lower than industry growth, our research suggests Keysight’s OM percentage, sustainability of sales growth, and free cash flow generation should be more resilient than prior cycles as the company benefits from being a focused T&M player.”

Keysight Technologies recently traded at $30.45, down 2.25 percent.