Overview
UBS has raised its price target on Keysight Technologies to $340 from $230 and reiterated a Buy rating on the stock. The upgrade follows a quarter in which Keysight reported revenue and earnings ahead of expectations and issued a second-quarter outlook that implies continued double-digit revenue growth. UBS highlighted the outsized contribution from AI-related orders and signaled that AI demand may be gaining strength as the company moves into the next quarter.
Quarterly results and guidance
Keysight posted first-quarter revenue of $1.6 billion, representing a 23% increase year-over-year. The company reported adjusted earnings per share of $2.17 for the quarter, above the $2.00 consensus estimate referenced in market reports. For the second quarter, Keysight guided to revenue of $1.7 billion at the midpoint, which implies year-over-year growth of 30% at that midpoint figure. The company also provided adjusted earnings-per-share and revenue guidance for the second quarter that surpassed the analyst consensus compiled by LSEG.
Market reaction and valuation
Shares of Keysight have climbed 47% over the past six months to $294.51, giving the company a market capitalization of $50.52 billion. Despite the strong momentum, third-party analysis cited in market commentary indicates the stock is trading above its Fair Value, with a price-to-earnings ratio reported at 58.84. That high earnings multiple was flagged as a valuation consideration for potential investors.
Drivers of UBS's revision
UBS pointed to an unexpectedly robust performance in the first quarter and to broadening AI-related demand across Keysight’s customer base. The bank noted that AI orders in the quarter significantly exceeded the company’s consolidated order growth of 30%, and that AI demand appears to be accelerating heading into the coming quarter. UBS also cited solid results in Keysight’s aerospace and defense and enterprise, industrial, and semiconductor end markets when adjusting its forecasts.
Earnings estimate changes and valuation multiple
Following the quarter, UBS lifted its earnings-per-share estimates for fiscal 2026 and fiscal 2027 to $9.01 and $10.48, respectively, up from previous estimates of $8.09 and $9.20. The firm established its new price target using a multiple of 29 times its fiscal 2028 EPS estimate of $11.66, an increase from the prior multiple of 25 times. UBS also expects $100 million of acquisition-related synergies to be recognized over the next year.
Investor implications
The combination of stronger-than-expected results, elevated guidance, and a bullish thesis around AI-related demand has supported investor confidence and driven the share-price rally. Market commentary emphasizes both the growth signals from order flow and the valuation premium implied by the current trading multiple. Investors are watching execution on AI-related opportunities and the realization of the stated acquisition synergies as near-term indicators.
Note on information
The details in this report reflect company-reported results and the changes to UBS’s estimates and valuation multiple as communicated following Keysight’s first-quarter results and second-quarter outlook. The report summarizes the figures and commentary as presented in company and analyst communications.