Citi slightly raises Agilent Technologies (A) estimates and target after Agilent posted a solid FQ2 (revenue of $1.46 billion vs. $1.43 billion consensus) and $0.51 vs. $0.48). Management also reaffirmed guidance for FY2008 and matched the street’s expectations for FQ3 outlook:
By delivering its 2nd straight Q of strong orders in a tough climate, A is proving its diversified biz can deliver defensive growth and solid leverage. We inch up our target to $44 and expect the stock could move to high-$30s in 2H08 if bio-analytical strength stays intact (6/10/08 Bio Analyst day) & semi-biz stabilizes/improves.
Citi was pleased with Agilent’s strength in Electronic Measurement, Bio-analytic sales, and nucleic acid workflow solutions:
Electronic Measurement grew 5% y/y for 2nd straight quarter – mil/aero and wireless R&D initiatives remain strong with continued evidence of stabilisation in network monitoring and growth in broadband test.
Bio-analytic sales grew 20% y/y accelerating from 15% y/y prior Q. While U.S. Pharma was flattish, strength in China/India Life Sciences and Chemical Analysis provided a positive offset.
Nucleic acid workflow solutions ($100M/yr microarray biz, $100M/yr Stratagene biz, $40M/yr Velocity 11 biz & microfluidics) doubled y/y helped by organic growth in arrays and inorganic contributions.
Citi reiterates its Buy/Medium Risk rating.