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Wolfe Research cuts Agilent stock rating to peerperform, citing limited upside

Published 27/06/2024, 09:46 pm
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On Thursday, Wolfe Research adjusted its stance on shares of Agilent Technologies, Inc. (NYSE:A), moving its rating from Outperform to Peerperform.

The firm's analyst cited a forecast for Agilent to achieve organic revenue growth of 5-6% and to expand its operating margin by 50-100 basis points annually from 2025 to 2028. The firm anticipates a recovery in key growth areas such as NASD, Cell Analysis, and Genomics starting in 2025, along with an expected increase in LDD China revenue growth that year due to stimulus efforts.

The analyst believes that the financial expectations for 2024-2025 are secure following the guidance reset in the second fiscal quarter.

However, they also noted that the potential for significant upside to Wolfe Research's expectations is limited. This assessment is based on the view that possible drivers for revenue and earnings per share (EPS) growth are already reflected in current financial models.

Agilent's shares are currently trading at a premium compared to its peers, approximately 20% higher on an EBITDA basis and around 7% higher on an EPS basis. This valuation, according to Wolfe Research, captures the potential growth drivers, suggesting that the stock's current price adequately reflects the company's future prospects.

The firm's analysis of Agilent's position in the market and its future outlook has led to the revised stock rating. The change reflects Wolfe Research's evaluation of the company's performance potential relative to industry peers and consensus expectations for the coming years.

In other recent news, Agilent Technologies has experienced a mixture of developments. The company reported a 7.4% decline in revenue for the second quarter of 2024, totaling $1.573 billion, despite exceeding expectations with an earnings per share of $1.22. The full-year core revenue outlook has been revised, projecting a decline between 4.3% and 5.4%, with EPS anticipated to be between $5.15 and $5.25.

Citi reaffirmed its Neutral stance on Agilent, following an announcement from Alnylam Pharmaceuticals regarding successful top-line results from its HELIOS-B clinical study. The trial evaluated vutrisiran, branded as Amvuttra, for the treatment of ATTR amyloidosis with cardiomyopathy, and achieved its primary endpoints. Citi anticipates that the positive trial results will likely lead to an expanded label for Amvuttra to include ATTR-CM, potentially boosting Agilent's revenues in the long term.

In addition to these developments, Agilent has launched two new mass spectrometry products, the Agilent 7010D Triple Quadrupole GC/MS System and the Agilent ExD Cell. These launches are part of Agilent's commitment to customer-driven innovation, addressing the needs of various sectors including bio/pharma, life science research, food, and environmental sectors.

The company also announced plans to streamline its cost structure, aiming for $100 million in annualized savings by fiscal year-end, and intends to repurchase $750 million of its common stock in the latter half of the year.

These are the recent developments for Agilent Technologies.

InvestingPro Insights

As Agilent Technologies, Inc. (NYSE:A) navigates through a period of strategic growth and cost optimization, the latest data from InvestingPro provides a deeper financial perspective on the company's performance and market position.

InvestingPro Data highlights that Agilent's market capitalization stands at a robust $39.3 billion, with the company trading at a price-to-earnings (P/E) ratio of 31.28. This valuation reflects a market that sees value in Agilent's business model, despite a revenue decline of -6.38% over the last twelve months as of Q2 2024. The company's ability to maintain a high gross profit margin of 50.63% during the same period underlines its operational efficiency in generating earnings from its revenues.

From an investment standpoint, one of the InvestingPro Tips points out that Agilent's management has been actively repurchasing shares, signaling confidence in the company's financial health and future growth prospects. Additionally, the company's consistent dividend payments for 13 consecutive years, coupled with a dividend growth of 4.89% in the last twelve months as of Q2 2024, provide a measure of stability and return for shareholders.

While some analysts have revised their earnings expectations downwards for the upcoming period, it's worth noting that Agilent is still predicted to be profitable this year, as per another InvestingPro Tip. This aligns with the positive outlook on Agilent's financial security for 2024-2025 mentioned in the article. Investors seeking to explore further insights and additional tips, including 12 more that are available, can visit https://www.investing.com/pro/A and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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