Goldman Bullish On Agilent Technologies, Raises Price Target To $53

Goldman Sachs remains bullish on Agilent Technologies Inc A and raised its price target by $3 to $53, saying the company is "best positioned to benefit from both underlying end-market strength and improving internal execution."

The brokerage said both the end-market strength and internal execution should boost margins and organic growth above consensus expectations.

Goldman, which has a Buy rating on Agilent, said the company's fourth quarter guidance looks conservative as it has beaten organic growth/EPS guidance by an average of 2 percent/9 percent since CEO Mike McMullen took over in early 2015.

"We believe that guidance and consensus expectations capture a muted outlook in key end markets which sets up Agilent to beat near term expectations," analyst Isaac Ro wrote in a note.

Contrary to the management's expectations of declining revenues in Biopharma segment, the analyst sees no reason for a slowdown given new drug launches and healthy pipelines.

"We continue to believe the durability of Agilent's organic revenue growth and margin expansion profile are underappreciated. In the trailing 5 quarters, Agilent has accelerated both organic growth and operating margins while consensus expectations have not seen any material upward revisions," Ro highlighted.

As such, Ro still sees current valuation as an attractive entry point with shares trading at an 2.2 percent discount to peers on average based on 2017 P/E.