Agilent (A) Up 1.3% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Agilent Technologies (A). Shares have added about 1.3% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Agilent due for a pullback? 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 Q4 Earnings Surpass Estimates, Revenues Increase Y/YAgilent Technologies reported fourth-quarter fiscal 2024 earnings of $1.46 per share, which beat the Zacks Consensus Estimate by 3.6%. The figure increased 5.8% year over year.Revenues of $1.70 billion surpassed the Zacks Consensus Estimate by 1.67%. The top line increased 0.8% on a reported basis and moved down 0.3% on a core basis from the year-ago quarter.This growth was driven by advancements in the Pharmaceutical, Diagnostics and Clinical sectors, along with improvements in the Chemical and Advanced Materials markets.However, the company faced challenges in the Food, Academic and Government, and Environmental and Forensics markets in the reported quarter.Modest weakening conditions in the Americas and China region were significant headwinds, whereas growing momentum across Europe and the Asia Pacific provided a tailwind.Segmental Top-Line DetailsAgilent currently has three reporting segments — Life Sciences & Applied Markets Group (“LSAG”), Agilent Cross Lab Group (“ACG”), and Diagnostics and Genomics Group (“DGG”).LSAG: The segment generated $833 million or 49% of the company’s total revenues. This marked a 1% decline both on a reported and core basis compared with the prior-year quarter. This was due to softness in the instrument business as customers took a cautious approach toward capital expenditures. However, this was offset by strong demand for analytical lab consumables, which demonstrated mid-single-digit growth or better across all end markets and regions.ACG: Revenues from the segment were $426 million, accounting for 25% of the total revenues. The top line grew 5% on a reported basis and 5% on a core basis compared with the prior-year quarter. This was driven by strong growth in contract business, including the fast-expanding Enterprise Services segment, which posted double-digit growth in the reported quarter. ACG achieved growth in all markets and regions except China, which was flat year over year but improved sequentially.DGG: Revenues decreased 1% year over year on a reported and 3% on a core basis to $442 million, accounting for the remaining 26% of the total revenues. This was led by expected softness in Cell Analysis and NASD, partially offset by strong high-single-digit growth in the Cancer Dx business and improved results in Genomics.The company recently unveiled a new organizational structure, aimed at accelerating its operational transformation and driving higher growth through a market-focused, customer-centric strategy. The new structure includes the Life Sciences and Diagnostics Markets Group (LDG), Applied Markets Group (AMG) and Agilent Cross Lab Group (ACG).Operating ResultsFor the fourth quarter of 2024, the gross margin in the LSAG segment contracted 40 basis points (bps) to 59.1% from the prior-year quarter. ACG’s gross margin expanded 50 bps to 50.9%. DGG’s gross margin contracted 220 bps year over year to 51.5%.Research and development (“R&D”) expenses on a non-GAAP basis were $109 million, down 6% from the prior-year quarter. Selling, general and administrative (SG&A) expenses on a non-GAAP basis rose slightly to $362 million, marking a 1.4% increase from the prior-year quarter.As a percentage of revenues, R&D expenses fell 50 bps year over year to 6.4%, whereas SG&A expenses grew 10 bps year over year to 21.3%.The non-GAAP operating margin of 27.4% for the fiscal fourth quarter of 2024 indicates a year-over-year contraction of 40 bps.Segment-wise, the operating margin in the LSAG segment declined 60 bps to 28% from the prior-year quarter. ACG’s operating margin fell 180 bps year over year to 32.6%. Meanwhile, the DGG’s operating margin contracted 140 bps year over year to 21.3%.Balance Sheet & Cash FlowAs of Oct. 31, 2024, Agilent’s cash and cash equivalents were $1.33 billion, down from $1.78 billion as of July 31, 2024.Accounts receivables were $1.32 billion at the end of the fourth quarter of fiscal 2024 compared with $1.23 billion at the end of the third quarter.The long-term debt was $3.35 billion for the reported quarter compared with $2.14 billion in the prior quarter.Cash flow from operating activities was $481 million in the fourth quarter of fiscal 2024 compared with $452 million in the previous quarter.Agilent’s Q1 GuidanceFor the first quarter of fiscal 2025, management expects revenues of $1.650-$1.680 billion, indicating a decline of 0.5% against an increase of 1.3% on a reported basis and a decrease of 2% versus a rise of 0.2% on a core basis from the year-ago quarter’s actuals.Non-GAAP fiscal first-quarter earnings per share are expected to be $1.25-$1.28.For fiscal 2025, management revised its revenue guidance from $6.45-$6.50 billion to $6.79-$6.87 billion, implying an increase of 4.3-5.5% on a reported basis and 2.5-3.5% on a core basis from the fiscal 2024 reported figure.The company also revised fiscal 2025 non-GAAP earnings per share guidance from $5.21-$5.25 to $5.54-$5.61.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.The consensus estimate has shifted -8.21% due to these changes.VGM ScoresCurrently, Agilent has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Agilent has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Agilent Technologies, Inc. (A): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks