Agilent Technologies Inc (NYSE: $A) is a global analytical and clinical laboratory technology leader. Headquartered in Santa Clara, California, the company provides instruments, software, services, and consumables for laboratories. It was established in 1999 and dealt with optics, semiconductors, and electronics testing equipment between 1999-2014. It later expanded to pharmaceutical, diagnostics, clinical, and academic/government research markets after 2014.
Agilent announced its Q2 fiscal 2024 results on May 29, 2024, for the quarter ended April 30, 2024.
Agilent Technologies Second Quarter Results
The company reported revenue of $1.57 billion for the quarter ended April 30, 2024, representing a decline of 8.4% on a reported basis and 7.4% on a core basis compared to the same period last year.
On the earnings front, Agilent’s GAAP net income for the quarter was $308 million, or $1.05 per diluted share, up from $302 million, or a diluted EPS of $1.02, in the second quarter of fiscal 2023. On a non-GAAP basis, net income was $356 million, or $1.22 per diluted share, down from $377 million, or $1.27 per diluted share, in the year-ago quarter.
Segment Performance
Life Sciences and Applied Markets Group (LSAG) segment reported revenue of $754 million, a decrease of 14% reported and 13% core year-over-year. The operating margin for the quarter was 24.7%.
For Diagnostics and Genomics Group (DGG), it reported revenue of $417 million, a 9% decrease on a reported basis and an 8% decline on a core basis compared to the prior-year quarter. The operating margin for this segment was 20.5%.
On the CrossLab Group (ACG) side, revenue increased by 4% reported and 5% core to $402 million. The operating margin for this segment was 30.5%.
On the other key financial highlights, Agilent’s profitability was mixed, with GAAP EPS rising 3% year-over-year to $1.05, while non-GAAP EPS declined 4% to $1.22. Cash flow strengthened as operating cash flow jumped to $818 million, though capital expenditures surged to $193 million. The company maintained a solid balance sheet position, with $1.671 billion in cash and cash equivalents and $2.136 billion in long-term debt as of April 30, 2024.
Full-Year and Q3 Outlook
Based on the slower market recovery, Agilent Technologies revised its full-year revenue outlook to $6.420 billion to $6.5 billion, representing a decline of 6.0% to 4.9% on a reported basis and a decrease of 5.4% to 4.3% on a core basis. The company also revised its fiscal 2024 non-GAAP earnings guidance to $5.15 to $5.25 per share.
For Q324, Agilent expects revenue in the range of $1.535 billion to $1.575 billion, a decline of 8.2% to 5.8% reported and 6.9% to 4.5% core. Non-GAAP EPS is expected to be in the range of $1.25 to $1.28.
Share Repurchase Program
Agilent Technologies announced plans to repurchase $750 million of its common stock by the end of the fiscal year, and the board authorized a new $2.0 billion share repurchase program.
Despite its Q2 revenue decline due to the slower market recovery in its business segments, Agilent demonstrated financial discipline and a commitment to investing in growth opportunities. While the company delivered on expectations, it revised its FY24 outlook to account for the changing market dynamics. Agilent focuses on streamlining operations, capturing growth opportunities and returning value to shareholders through this share repurchase program.
Management Commentary
“In Q2, we delivered on our expectations and showed the resiliency of our diversified business,” said Padraig McDonnell, Agilent’s President and CEO. “While we see the market improving, it is improving at a slower pace than anticipated. We are taking decisive action to streamline our cost structure and capture incremental opportunities in the markets as they recover.”
Agilent Technologies (A) Stock Performance
Agilent’s stock has underperformed the broader market this year, adding about 6.6% compared to the S&P 500’s gain of 11.2% as of Wednesday’s closing price of $145.48. In early trading hours on Thursday, May 30, A stock was down 10.47% as of 09:37 AM EDT.
The company’s mixed earnings estimate revisions trend has resulted in a Zacks Rank #3 (Hold) rating, suggesting that the stock is expected to perform in line with the market.
Should You Buy Agilent Shares in 2024?
With Agilent Technologies revising its full-year outlook downward due to slower market recovery, You may want to exercise caution before buying these company’s shares in 2024. While Agilent’s solid fundamentals, including strong cash flow generation and a healthy balance sheet, are positive factors, the mixed earnings estimate revisions and a Zacks Rank #3 (Hold) rating suggests the stock may only perform in line with the market in the near term.
Closely monitor Agilent’s ability to streamline operations, capture growth opportunities, and the overall industry outlook before making this investment decision.
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