ISI Group Reiterates Buy Rating, $48 PT on Agilent Technologies on Weaker 1Q Results

In a report published Friday, ISI Group reiterated its Buy rating and $48.00 price target on Agilent Technologies

. ISI Group noted, “Agilent posted weaker-than-expected 1Q results, as top-line growth was hindered by ~$30 MM of EMG order slippage, while EPS was constrained by the revenue push-out as well as a ~$0.02 hit from one time items. Mgmt noted that 25 customers drove the bulk of the order push out (all in the last week of Jan). Communications was impacted severely from these delays, and declined high teens during the Q while growth in rest of the segments (Life Sciences, Chemical Analysis and Diagnostics) was generally in-line with expectations. Mgmt lowered guidance to reflect an incremental Fx headwind and the potential impact of sequestration (10% cut to defense budgets at the mid-point) as well as a softer comms market. Despite the lowered guidance, Agilent believes that underlying fundamentals remain strong, and do not warrant a more significant restructuring (investor view likely to differ). We would also note that book-to-bill came in at 1.02x (vs. ISIe of 0.99x), a positive leading indicator. Given our view of a cyclical bottom in the tech as well as an improving macro picture, we reiterate our Buy rating on Agilent shares and raise our PT slightly from $47.50 to $48.00 (14x FY14 EPS; assumes latest cut to guidance / ISIe will be the last).” Agilent Technologies closed on Thursday at $44.58.