Keysight KEYS Q2 2025 Earnings Preview Upside Potential with Strong Revenue Rebound Expected

Forward-Looking Analysis
Keysight Technologies is set to release its Q2 2025 earnings on May 20, 2025. Analysts forecast a revenue range between $1.27 billion and $1.29 billion for the second fiscal quarter of 2025. This aligns with expectations of a modest beat on its fiscal 2025 guidance. Revenue growth is projected at 7% over the next two years, indicating a recovery in end-market demand. Earnings per share (EPS) are anticipated to grow by 17.9% annually, with a robust return on equity forecasted at 25.2% over three years. Consensus EPS estimates have increased by 25% as of August 2024, showcasing optimistic sentiment towards Keysight's earnings trajectory. Although revenue growth is slower than the market average, the company's strategic focus on AI, Ethernet, and cybersecurity innovations is expected to bolster shareholder value. With good analyst coverage and a forecasted earnings growth rate of 15.9% annually, Keysight appears to be on a positive growth trajectory.

Historical Performance Review
In Q1 2025, Keysight reported revenue of $1.30 billion and net income of $169.00 million, with EPS at $0.97. Despite revenues exceeding analysts’ expectations, EPS lagged behind. The gross profit stood at $820.00 million, reflecting a solid operational performance, though challenges in meeting EPS expectations indicate potential areas for improvement.

Additional News
Recent developments at Keysight Technologies include expanding USB standards support in its System Designer for USB and introducing next-generation embedded security test benches. The company has also achieved a new benchmark of 448 Gbps data transmission for AI data centers, in collaboration with NTT Innovative Devices and Lumentum. Despite these technological advancements, investor sentiment has deteriorated due to a 16% drop in stock price, rendering Keysight 22% undervalued. Furthermore, Keysight launched a 1.6T platform and software to automate network interconnect performance validation, alongside sampling oscilloscopes for AI data centers. These innovative strides are set to enhance Keysight's market position and operational capabilities.

Summary & Outlook
Keysight Technologies demonstrates strong financial health with positive revenue growth and an ambitious EPS increase. While recent stock undervaluation presents short-term challenges, the company’s strategic focus on AI and cybersecurity innovations is a promising growth catalyst. The robust forecasted return on equity suggests a bullish outlook for Keysight. Despite past EPS performance shortcomings, the company’s technological advancements and market positioning indicate potential for value creation and shareholder returns in the long term.