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Keysight Technologies (KEYS)
NYSE:KEYS
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Keysight Technologies
(NYSE:KEYS)
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Rating:73Outperform
Price Target:
$336.00
▲(9.79% Upside)
Action:ReiteratedDate:02/25/26
The score is driven by strong financial quality (notably cash generation and a solid balance sheet) and an upbeat earnings call with strong guidance, orders, and margins. Offsetting factors are overbought technical conditions that raise near-term pullback risk and a high P/E valuation; the sharp prior TTM revenue contraction remains a key fundamental watch item.
Positive Factors
Strong cash generation
Keysight converts earnings into cash exceptionally well, with TTM free cash flow nearly matching net income and rising year-over-year. Durable cash conversion supports capex, R&D, buybacks and M&A funding without relying on external financing, improving long-term financial flexibility.
Solid balance sheet, moderate leverage
A moderately levered balance sheet (debt under half of equity) and a large equity base provide room to absorb cyclicality or execute strategic initiatives. This structural strength preserves funding optionality for investments and cushions downside during revenue cycles over the next several months.
Recurring revenue mix and secular demand tailwinds
Software/services (~40% of revenue) and ARR (~29%) increase revenue stickiness while record orders and secular demand in AI, wireline and optical expand the addressable market. Combined, recurring mix plus structural end-market tailwinds support more predictable, durable revenue and margin profiles.
Negative Factors
Sharp trailing revenue contraction
A roughly 24% TTM revenue decline is a meaningful durability risk: it indicates prior cyclical weakness or lost volumes that can pressure long-term growth assumptions, margins and return on invested capital. Sustained recovery is required to validate recent margin and cash trends.
Acquisition integration and near-term margin dilution
Material recent M&A has boosted reported top-line but brought lower-margin revenue and integration tasks (ERP migrations, synergy realization). Execution risk and delayed synergy timing can compress near-term margins and complicate multi-quarter operating leverage even if long-run benefits exist.
Regulatory/tariff uncertainty and limited visibility
Unmodeled tariff or regulatory outcomes introduce a structural cost and pricing risk that could alter margins or supply economics. Coupled with management's statement of fading visibility beyond a couple of quarters, this uncertainty can materially affect planning and capital allocation over the medium term.
Keysight Technologies (KEYS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$51.71B
Dividend YieldN/A
Average Volume (3M)1.27M
Price to Earnings (P/E)54.5
Beta (1Y)1.66
Revenue Growth7.95%
EPS Growth39.54%
CountryUS
Employees15,400
SectorTechnology
Sector Strength88
IndustryHardware, Equipment & Parts
Share Statistics
EPS (TTM)2.17
Shares Outstanding171,517,760
10 Day Avg. Volume1,712,531
30 Day Avg. Volume1,273,435
Financial Highlights & Ratios
PEG Ratio0.96
Price to Book (P/B)5.39
Price to Sales (P/S)5.89
P/FCF Ratio24.71
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue9.28
Enterprise Value/Gross Profit15.01
Enterprise Value/Ebitda37.51
Forecast
1Y Price Target
$292.90Price Target Upside-4.29% Downside
Rating ConsensusStrong Buy
Number of Analyst Covering10
EPS Forecast (FY)8.77
Revenue Forecast (FY)$6.56B
Keysight Technologies Business Overview & Revenue Model
Company DescriptionKeysight Technologies, Inc. provides electronic design and test solutions to commercial communications, networking, aerospace, defense and government, automotive, energy, semiconductor, electronic, and education industries in the Americas, Europe, and the Asia Pacific. Its Communications Solutions Group segment provides electronic design automation (EDA) software; radio frequency and microwave test solutions, and related software; hardware and virtual network test platforms and software applications, including data center, routing and switching, software defined networking, security, and encryption; oscilloscopes, logic and serial protocol analyzers, logic-signal sources, arbitrary waveform generators, and bit error rate testers; and optical modulation analyzers, optical component analyzers, optical power meters, and optical laser source solutions, as well as resells refurbished used Keysight equipment. The company's Electronic Industrial Solutions Group segment offers design tools; design verification tools; and digital multimeters, function generators, frequency counters, data acquisition systems, audio analyzers, LCR meters, thermal imagers, source measure units, ultra-high precision device current analyzers, and test executive software platforms, as well as various power supplies comprising AC/DC modular supplies and electronically programmable loads. This segment also provides printed-circuit-board-assembly testers, integrated circuit parametric testers, and sub-nano-meter positioning sub-assemblies; and test and measurement products and software. The company offers product support, technical support, and training and consulting services. It sells its products through direct sales force, distributors, resellers, and manufacturer's representatives. Keysight Technologies, Inc. was founded in 1939 and is headquartered in Santa Rosa, California.
How the Company Makes MoneyKeysight Technologies generates revenue through multiple streams, primarily by selling its test and measurement equipment, software, and services. The company's core revenue comes from the sale of hardware products such as oscilloscopes, signal analyzers, and network analyzers, which are crucial for various industries in testing and validating electronic designs. In addition to hardware, Keysight offers software solutions for simulation and design automation, which provide recurring revenue through subscriptions and licenses. The company also benefits from maintenance and support services, which generate ongoing income. Significant partnerships with major technology firms, research institutions, and government agencies further enhance Keysight's market position and contribute to its revenue growth. Overall, Keysight's diverse product portfolio and strong presence in various high-demand sectors underpin its financial performance.
Keysight Technologies Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes sales performance across various business units, showing which areas are driving growth and contributing most to the top line.
Analyzes sales performance across various business units, showing which areas are driving growth and contributing most to the top line.
Data provided by:
The Fly
The FlyKeysight Technologies Earnings Call Summary
Earnings Call Date:Feb 23, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 19, 2026
Earnings Call Sentiment Positive
The call presented strong, broad-based operational and financial outperformance: record revenue, orders, margin expansion, robust cash flow, and upbeat near-term guidance driven by secular tailwinds in AI, wireline, optical, and defense. Risks cited were primarily execution and timing related to recent acquisitions (near-term margin dilution and ERP migration), some regulatory (tariff) uncertainty not yet modeled, and limited visibility beyond a couple of quarters. On balance, the positives (revenue, orders, margins, cash flow, market tailwinds and confident guidance) substantially outweigh the manageable lowlights.Q1-2026 Updates
Positive Updates
Record Q1 Revenue and EPS
Total company revenue of $1.600 billion, up 23% year-over-year on a reported basis (core revenue +14%). Net income of $376 million and diluted EPS of $2.17, both up 19% year-over-year. Revenue and EPS exceeded the high end of guidance for the quarter.
Strong Order Momentum
Orders of $1.645 billion, up 30% year-over-year on a reported basis and up 22% on a core basis, indicating meaningful demand acceleration and a robust funnel.
Expanded Margins and Operating Leverage
Gross margin improved to 66.7%, up 90 basis points year-over-year; operating margin of 27.4%, up 20 basis points. Core business operating margin was 28.9%, up 170 basis points, delivering 41% core operating leverage in the quarter.
Segment Strength — Communications Solutions
Communications Solutions Group revenue of $1.124 billion, up 27% reported and up 16% core, with a gross margin of 68.5% and operating margin of 27.5%. Wireline orders outpaced wireless and wireline delivered its ninth consecutive quarter of growth.
Segment Strength — Electronic Industrial Solutions
EISG revenue of $476 million, up 15% year-over-year with record quarterly revenue and double-digit growth across general electronics, semiconductors, and automotive & energy markets.
AI, Optical and Wireline Tailwinds
Company highlighted multiple secular tailwinds — AI infrastructure, higher-speed Ethernet (800G, 1.6T, 3.2T), optical interconnect adoption, and system-level validation — with AI-related exposure previously sized ~10% of revenue and stronger-than-company-average orders in that sub-bucket.
Software/Recurring Revenue Mix and ARR
Software and services comprised ~40% of revenue; software specifically >25% (around 26-27%). Annual recurring revenue (ARR) was ~29% of total revenue, supporting stickiness and long-term visibility.
Strong Cash Generation and Capital Returns
Operating cash flow of $441 million and free cash flow of $407 million in Q1. Cash and equivalents ~ $2.2 billion. Repurchased ~420,000 shares for ~$87 million during the quarter and Board authorized a $1.5 billion buyback program.
Confident Near-Term Outlook and Upsized Full-Year View
Q2 revenue guide of $1.690B–$1.710B (midpoint ~30% year-over-year growth) and EPS guide $2.27–$2.33 (~35% YoY at midpoint). Company now expects total fiscal '26 revenue and earnings growth just above 20% (all-in). Acquisition-related revenue target of $375 million for fiscal '26 unchanged and synergy target remains >$100 million in run-rate cost synergies.
Defense and Aerospace Momentum
Record Q1 orders in aerospace, defense and government driven by program expansions, production automation and new system deployments; grew revenue in the segment (A&D revenue $366M, +18% YoY) with wins in threat emulators, space/satellite testing and PNT offerings.
Negative Updates
Acquisitions Dilutive to Near-Term Margins
Recent acquisitions added ~8 points to reported revenue and have lower operating margins, making them dilutive to consolidated operating margin in the first year; expected >$100M in synergies are heavily weighted to late 2026 (ERP migration timeline).
Core vs Reported Growth Discrepancy
Reported revenue growth of 23% includes ~8 points from acquisitions and ~1 point from currency; core revenue growth was 14%, indicating some portion of headline growth is inorganic.
Tariff / Regulatory Uncertainty Not in Guidance
Management noted the recent Supreme Court decision on tariffs is not reflected in current guidance and the company is still assessing potential impacts, introducing an unresolved risk to future results.
Integration and Execution Risks
Multiple recent acquisitions (including Spirent) require integration (ERP migrations and synergy realization) with expected synergy benefits concentrated later in 2026, creating short-to-medium-term execution risk.
Supply-Chain and Component Price Pressure
Management acknowledged potential price increases for memories/DRAM could affect margins on the margin; while not a primary exposure, memory price moves were factored into guidance and remain a watch item.
Visibility Falls Off Beyond Two Quarters
Management emphasized strong visibility one quarter out and decent visibility into quarter two/three, but lower clarity for the full back half of the year, leading to conservative assumptions for the latter periods despite strong early momentum.
Company Guidance
Keysight guided Q2 revenue of $1.690–$1.710 billion (about 30% year‑over‑year growth at the midpoint) and Q2 diluted EPS of $2.27–$2.33 (about 35% YoY at the midpoint) based on a weighted diluted share count of ~173 million, reiterated an expectation of $375 million of acquisition‑related revenue for fiscal 2026 and a >$100 million run‑rate synergy target (realization weighted to late 2026), and said its base case for fiscal 2026 is total annual revenue and earnings growth just above 20%; the guidance does not contemplate any impact from the recent Supreme Court tariff decision. For context, Q1 results that underpin the outlook were: revenue $1.600 billion (+23% reported, +14% core), orders $1.645 billion (+30% reported, +22% core), gross margin 66.7% (+90 bps), operating margin 27.4% (+20 bps), net income $376 million, EPS $2.17 (+19%), cash ~$2.2 billion, and free cash flow $407 million.Keysight Technologies Financial Statement Overview
Summary
Strong cash generation (free cash flow close to net income and up year over year) and a solid, moderately levered balance sheet support a good financial profile. The main offset is the sharp TTM revenue contraction (about -24%), which raises durability risk despite resilient margins.Income Statement
Profitability remains strong in TTM (Trailing-Twelve-Months), with healthy gross and operating margins and an improved net margin versus the latest annual period. However, the revenue trajectory is the key concern: TTM sales are down sharply (about -24%), and earnings are below prior peak levels, signaling meaningful cyclical or demand pressure despite resilient margins.67
Positive
Balance Sheet
The balance sheet looks solid with moderate leverage (debt at under half of equity in TTM (Trailing-Twelve-Months)) and a large equity base supporting the asset footprint. Returns on equity are still healthy but have moderated from earlier highs, and total debt remains material, which can limit flexibility if the current revenue downturn persists.74
Positive
Cash Flow
Cash generation is a clear strength: TTM (Trailing-Twelve-Months) free cash flow is very close to net income and has grown year over year, indicating strong cash conversion and disciplined spending. A watch item is that operating cash flow covers a smaller share of EBITDA (sub-1x), suggesting some working-capital or timing headwinds even as overall free cash flow remains robust.80
Positive
| Breakdown | TTM | Oct 2025 | Oct 2024 | Oct 2023 | Oct 2022 | Oct 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.68B | 5.38B | 4.98B | 5.46B | 5.42B | 4.94B |
| Gross Profit | 3.51B | 3.34B | 3.13B | 3.53B | 3.45B | 3.07B |
| EBITDA | 1.41B | 1.43B | 1.22B | 1.65B | 1.59B | 1.38B |
| Net Income | 958.00M | 846.00M | 614.00M | 1.06B | 1.12B | 894.00M |
Balance Sheet | ||||||
| Total Assets | 11.48B | 11.29B | 9.27B | 8.68B | 8.10B | 7.78B |
| Cash, Cash Equivalents and Short-Term Investments | 2.18B | 1.87B | 1.80B | 2.47B | 2.04B | 2.05B |
| Total Debt | 2.96B | 2.97B | 2.03B | 2.03B | 2.02B | 2.02B |
| Total Liabilities | 5.28B | 5.42B | 4.16B | 4.03B | 3.94B | 4.00B |
| Stockholders Equity | 6.21B | 5.88B | 5.11B | 4.65B | 4.16B | 3.78B |
Cash Flow | ||||||
| Free Cash Flow | 1.47B | 1.28B | 898.00M | 1.21B | 959.00M | 1.15B |
| Operating Cash Flow | 1.47B | 1.41B | 1.05B | 1.41B | 1.14B | 1.32B |
| Investing Cash Flow | -1.74B | -1.73B | -819.00M | -288.00M | -251.00M | -353.00M |
| Financing Cash Flow | 360.00M | 385.00M | -913.00M | -687.00M | -861.00M | -671.00M |
Keysight Technologies Technical Analysis
Positive
306.03
Price Trends
220.41
Positive
200.65
Positive
182.81
Positive
Market Momentum
16.08
Negative
87.55
Negative
90.41
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KEYS, the sentiment is Positive. The current price of 306.03 is above the 20-day moving average (MA) of 238.07, above the 50-day MA of 220.41, and above the 200-day MA of 182.81, indicating a bullish trend. The MACD of 16.08 indicates Negative momentum. The RSI at 87.55 is Negative, neither overbought nor oversold. The STOCH value of 90.41 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KEYS.
Keysight Technologies Risk Analysis
Keysight Technologies disclosed 38 risk factors in its most recent earnings report. Keysight Technologies reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Keysight Technologies Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $31.64B | 35.84 | 8.92% | ― | 7.41% | -12.85% | |
73 Outperform | $51.71B | 54.51 | 16.82% | ― | 7.95% | 39.54% | |
73 Outperform | $28.12B | 41.42 | 47.87% | 0.14% | 13.18% | -38.37% | |
72 Outperform | $23.87B | 29.40 | 16.85% | ― | 0.77% | 0.51% | |
67 Neutral | $18.32B | 33.34 | 7.78% | 0.43% | -8.96% | -30.29% | |
63 Neutral | $15.88B | 38.21 | 7.32% | ― | -0.86% | -75.37% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
KEYS
Keysight Technologies
306.03
146.50
91.83%
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63.21
25.32
66.83%
JBL
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271.91
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75.79%
TDY
Teledyne Technologies
678.82
163.80
31.80%
TRMB
Trimble
68.23
-3.75
-5.21%
FTV
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59.80
0.09
0.14%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.