KEYS: Future Returns Will Depend On AI Inflection And End Market Recovery

Analysts have nudged our Keysight Technologies fair value estimate slightly higher to about $216 from roughly $213, reflecting improved confidence in double digit EPS growth, stabilizing wireless and defense demand, and a looming AI driven inflection that could support modest multiple expansion.

Analyst Commentary

Street research remains broadly constructive on Keysight, with recent actions highlighting a balanced mix of optimism around growth acceleration and caution on what is already embedded in the share price.

Bullish Takeaways

• Bullish analysts point to the company being past its cyclical trough, citing stabilizing wireless trends and improving defense demand as foundations for a sustained recovery in organic growth.
• Several price target hikes reflect confidence that Keysight can deliver double digit EPS growth, underpinned by revenue outperformance and disciplined margin execution.
• Keysight is viewed as a clear leader in electronic test and design, with exposure to artificial intelligence infrastructure and synergies from recent acquisitions seen as catalysts for an inflection in growth.
• Supportive views argue that an eventual acceleration in the core business, combined with operating leverage, can justify some multiple expansion from current valuation levels.

Bearish Takeaways

• Bearish analysts contend that a high quality profile and mid single digit organic growth outlook are already reflected in the current valuation, limiting near term upside.
• The shift from Buy to Hold by some on the Street underscores concern that recent outperformance and rising expectations may leave little room for execution missteps.
• There is caution that while AI and end market normalization offer attractive long term drivers, timing and magnitude of the anticipated inflection remain uncertain, which could cap further re rating in the near term.
• Some see Keysight’s risk reward as more balanced at current levels, arguing that investors may need clearer evidence of sustained growth acceleration before assigning a higher earnings multiple.

What's in the News

• Launched the N99xxD-Series FieldFox handheld analyzer, enabling 120 MHz gap free IQ streaming, real time spectrum analysis, and AI driven signal classification for complex RF environments (Product related announcement).
• Board authorized a new share repurchase program of up to $1.5 billion, following approval of a fresh buyback plan on November 24, 2025 (Buyback transaction announcements).
• Issued revenue guidance for the first quarter of fiscal 2026 in the range of $1.53 billion to $1.55 billion, indicating expectations for continued top line growth (Corporate guidance).
• Expanded high volume electronics manufacturing offerings with the new i7090 massively parallel PCBA test platform and A90 ASATS flash programming system to increase throughput and reduce test costs (Product related announcements).
• Introduced Quantum System Analysis EDA and the Wireless Pro 3GPP AI Simulation Platform, aimed at next generation quantum computing and AI enabled 5G or 6G system design and validation (Product related announcements).

Valuation Changes

• The fair value estimate has risen slightly to approximately $216 from about $213, reflecting modestly higher long term earnings expectations.
• The discount rate has edged up marginally to roughly 8.62 percent from about 8.61 percent, implying a slightly higher required return.
• Revenue growth has increased slightly to around 8.95 percent from roughly 8.94 percent, signaling a modestly stronger top line outlook.
• The net profit margin has ticked down very slightly to about 19.62 percent from roughly 19.62 percent, effectively unchanged in the context of the overall model.
• The future P/E has risen slightly to roughly 33.4x from about 33.1x, indicating a modestly higher valuation multiple on projected earnings.