Yahoo Finance Why Is Agilent (A) Down 0.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Agilent Technologies (A). Shares have lost about 0.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Agilent due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Agilent Q2 Earnings Beat Estimates
Agilent Technologies delivered second-quarter fiscal 2024 earnings of $1.22 per share, which beat the Zacks Consensus Estimate by 2.5%. However, the bottom line decreased 4% from the year-ago quarter.
Revenues of $1.57 billion lagged the Zacks Consensus Estimate by 0.5%. The top line declined 8.4% on a reported basis and 7.4% on a core basis from the year-ago quarter.
The decline was attributed to broad-based weakness across all end markets, especially in the Pharma, Food, and Academic and Government markets.
Weak momentum in China was another concern.
Segmental Top-Line Details
Agilent has three reporting segments — Life Sciences & Applied Markets Group (“LSAG”), Agilent Cross Lab Group (“ACG”), and Diagnostics and Genomics Group (“DGG”).
LSAG: The segment accounted for $754 million or 48% of the company’s total revenues, down 14% on a reported basis and 13% on a core basis from the prior-year quarter. This was due to macroeconomic uncertainties, and sluggish capital equipment spending by customers. The reported figure missed the Zacks Consensus Estimate of $849 million.
Nevertheless, the company witnessed growth in pre-owned instruments and consumables.
ACG: Revenues from the segment were $402 million, accounting for 25% of the total revenues. The figure surpassed the consensus mark of $385 million. The top line improved 4% from the prior-year quarter on a reported basis and rose 5% on a core basis. Growing lab demand, along with solid momentum in the CrossLab team, contributed well. Strong growth in contract revenues was a positive.
DGG: Revenues decreased 9% year over year on a reported and 8% on a core basis to $417 million, accounting for the remaining 27% of the total revenues. The figure beat the consensus mark of $332 million. Sluggishness in NGS Chemistries, cell analysis and NASD was concerning.
Nevertheless, strength in the pathology business, owing to solid clinical demand for Agilent’s Cancer Dx platform, was a positive.
Operating Results
For the fiscal second quarter, the gross margin in the LSAG segment contracted by 40 basis points (bps) to 59.4% from the prior-year quarter. ACG’s gross margin expanded by 320 bps to 50.2%. DGG’s gross margin was flat year over year at 53.7%.
Research and development (“R&D”) costs were $113 million, down 10.3% from the prior-year quarter. Selling, general and administrative (“SG&A”) expenses were $380 million, down 8.4% from the year-earlier quarter. As a percentage of revenues, R&D expenses contracted by 10 bps year over year to 7.2%, while SG&A expenses were flat year over year at 24.2%.
The operating margin for the fiscal second quarter was 23.1%, which expanded 80 bps from the year-earlier quarter.
Segment-wise, the operating margin in the LSAG segment contracted by 320 bps to 24.7% from the prior-year quarter. ACG’s operating margin expanded by 390 bps to 30.5%. DGG’s operating margin remained flat year over year at 20.5%.
Balance Sheet
As of Apr 30, 2024, Agilent’s cash and cash equivalents were $1.67 billion, down from $1.75 billion as of Jan 31, 2024.
Accounts receivables were $1.249 billion at the end of second-quarter fiscal 2024 compared with $1.295 billion at the end of first-quarter fiscal 2024.
The long-term debt was $2.14 billion for the reported quarter, down from $2.56 billion in the prior quarter.
Guidance
For the third quarter of fiscal 2024, management expects revenues of $1.535-$1.575 billion, suggesting a decline of 8.2-5.8% on a reported basis and 6.9-4.5% on a core basis from the year-ago quarter.
Non-GAAP earnings per share are expected to be $1.25-$1.28.
For fiscal 2024, management revised revenue guidance downward from $6.71-$6.81 billion to $6.42-$6.50 billion, implying a fall of 6-4.9% on a reported basis and 5.4-4.3% on a core basis from the fiscal 2023 reported figure.
The company also revised fiscal 2024 non-GAAP earnings per share guidance downward from $5.44-$5.55 to $5.15-$5.25.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -10.94% due to these changes.
VGM Scores
At this time, Agilent has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Agilent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Agilent Technologies, Inc. (A): Free Stock Analysis Report
