Categories Analysis, Health Care

Should you buy Agilent Technologies (A) stock ahead of next week’s earnings?

As part of its build and buy strategy, the company recently acquired Resolutions Biosciences, a market leader in sequence-based oncology solutions

The impact of the COVID crisis on Agilent Technologies, Inc. (NYSE: A), a leading provider of medical diagnostic devices, has been relatively less severe. Despite a brief slowdown in the early days of the pandemic and lingering uncertainty, the Silicon Valley firm has remained an investors’ favorite, thanks to its proven business model focused on diversification and strategic deals.

Buy the Dip?

Agilent’s stock reached a record high this week after making steady gains for more than a year. The stock seems to have peaked, and experts predict that the recent pullback would extend into the remainder of the year. But the correction can be viewed as an opportunity to buy the stock, given Agilent’s strong growth prospects and ability to create shareholder value. For the near term, the shares look poised to bounce back after next week’s earnings release, if experts’ positive outlook is any indication. In short, Agilent is a fairly risk-free investment right now.

Read management/analysts’ comments on Agilent’s Q2 report

Agilent’s build and buy model has been successful so far and is expected to continue contributing to its growth going forward. As part of the strategy, the company recently acquired Resolutions Biosciences, a market leader in sequence-based oncology solutions. Also, the management is confident about leveraging the ongoing market recovery to stay resilient to pandemic-related uncertainties. Moreover, the tailwinds that drive the company’s growth are predictable and secular.

Six months into fiscal 2021 we are well on our way to achieving those objectives. Our build and buy growth strategy is delivering. The One-Agilent team continues to demonstrate its execution prowess and strong drive to win. We raised the bar on customer service and continue to exceed customer expectations in providing industry-leading products and services. While we are yet to fully emerge from the global pandemic, we are looking forward to the future with both optimism and confidence.

Mike McMullen, chief executive officer of Agilent Technology

Outlook Upped

In the second quarter, revenues grew by 23% and reached $1.53 billion, exceeding the market’s forecast. The impressive performance translated into a 37% jump in earnings, adjusted for special items, to $0.97 per share. Taking a cue from the positive numbers, which also topped Wall Street’s expectations, the management revised up its guidance.

When the company publishes its third-quarter results on August 17 after the closing bell, the market will be looking for a 27% year-over-year growth in adjusted earnings to $0.99 per share. Revenues are seen moving up to $1.54 billion. In the past two years, quarterly earnings have either beaten or matched estimates regularly.  

At the Bourses

Last month, shares of Agilent crossed the $150-mark for the first time, staying well above its long-term average. The stock has gained 23% in the past six months and outperformed the broad market.

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