Keysight Technologies
KEYS
$316.13
-0.12%
Keysight Technologies is a global leader in electronic design, test, and measurement solutions, providing instruments, software, and services to companies across the communications, aerospace, defense, automotive, and semiconductor industries. The company is distinct for its deep expertise in high-frequency and high-speed testing, serving over 30,000 customers with a mission to accelerate innovation and reduce time-to-market. Currently, the stock is in the spotlight following a record fiscal Q2 2026 earnings beat and raised guidance, driven by robust demand for its AI-related and communications test solutions, while also expanding into adjacent markets like software supply chain security through strategic partnerships.…
KEYS
Keysight Technologies
$316.13
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Investment Opinion: Should I buy KEYS Today?
Rating: Buy. Keysight's record Q2 FY2026 earnings beat, with revenue up 31.5% YoY and EPS of $2.02, validates its growth thesis. The consensus analyst target of $388.33 implies 8.5% upside, and the forward PE of 30.0x is reasonable given the PEG of 0.96. The company's gross margin of 68.6% and operating margin of 23.7% demonstrate pricing power and operational efficiency. Free cash flow of $1.447B TTM supports investment in R&D and strategic partnerships. The main risks are valuation premium and cyclicality; if revenue growth decelerates below 20%, the stock could see multiple compression. This Buy would upgrade if growth accelerates further, or downgrade to Hold if growth falls below 15%.
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KEYS 12-Month Price Forecast
The AI assessment is bullish given the strong fundamental momentum and reasonable valuation. The stock's growth is well above industry peers, and margins are expanding. The main risk is valuation, but the PEG ratio suggests fair pricing. I would upgrade to a more aggressive stance if revenue growth exceeds 35%, or downgrade if growth falls below 15%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Keysight Technologies's 12-month outlook, with a consensus price target around $415.08 and implied upside of +31.3% versus the current price.
Average Target
$415.08
0 analysts
Implied Upside
+31.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$350 - $452
Analyst target range
Keysight is covered by 12 analysts, with a consensus recommendation of 'Buy' and a mean recommendation score of 1.75 (where 1 is Strong Buy and 5 is Sell). The average price target is $388.33, implying an upside of 8.5% from the current price of $357.82. The distribution is bullish, with no Sell ratings and a majority of Overweight/Buy ratings, including recent upgrades from Morgan Stanley (Overweight) and reaffirmations from Citigroup, JP Morgan, and UBS. The target range spans from $250.00 (low) to $426.00 (high), representing a wide spread of 70.4% from low to high, indicating significant uncertainty about the stock's future trajectory. The high target of $426 assumes continued strong growth in AI-related test demand and successful execution on margin expansion, while the low target of $250 reflects concerns about a potential cyclical downturn or competitive pressures. The recent upgrade from Morgan Stanley on July 13, 2026, suggests improving sentiment, but the wide range highlights the stock's volatility and the need for careful risk management.
Bulls vs Bears: KEYS Investment Factors
Keysight presents a compelling growth story with accelerating revenue, expanding margins, and strong analyst support. The bull case is underpinned by record Q2 results and raised guidance, while the bear case centers on valuation premium and cyclicality. Currently, the bull evidence is stronger given the momentum and fundamental improvements, but the key tension is whether the 31.5% growth rate is sustainable. If growth persists, the stock has upside to the high target; if it falters, the premium multiple could compress sharply.
Bullish
- Record Q2 FY2026 earnings beat: Keysight reported Q2 FY2026 revenue of $1.717B, up 31.5% YoY, and EPS of $2.02, beating estimates. The company raised guidance, signaling strong demand for AI and communications test solutions.
- Accelerating revenue growth: Revenue growth accelerated from 4.3% in Q3 FY2025 to 31.5% in Q2 FY2026, with sequential improvement each quarter. This momentum is driven by secular trends in 5G/6G, AI, and aerospace/defense.
- High gross margin expansion: Gross margin improved to 68.6% in Q2 FY2026, up from 62.4% a year ago, reflecting favorable product mix and operational leverage. This supports profitability and cash flow generation.
- Strong analyst consensus and upside: With 12 analysts, consensus is Buy (mean score 1.75), and the average price target of $388.33 implies 8.5% upside. No sell ratings and recent upgrades from Morgan Stanley and others indicate positive sentiment.
Bearish
- Premium valuation to industry: KEYS trades at 37.3x trailing PE, a 49% premium to the industry average of 25.0x. If growth decelerates, multiple compression could lead to significant downside.
- High beta and volatility: With a beta of 1.21, KEYS is more volatile than the market. The stock has a max drawdown of -20.5% in the past year, indicating potential for sharp corrections.
- Dependence on cyclical end markets: Revenue is tied to semiconductor, communications, and aerospace/defense cycles. A downturn in any of these could reverse the current growth trajectory, as seen in the 2024-2025 slowdown.
- Wide analyst target range: Analyst targets range from $250 to $426, a 70% spread, reflecting high uncertainty. The low target implies a 30% downside from current levels, highlighting risk.
KEYS Technical Analysis
Keysight is in a powerful long-term uptrend, with the stock up 117.5% over the past year, significantly outperforming the S&P 500's 20.4% gain. The current price of $357.82 sits at 95.4% of its 52-week range (low of $152.85, high of $374.96), indicating strong momentum and bullish sentiment, though it also suggests the stock may be approaching overbought conditions. The 52-week low was set in early 2026, and the stock has since rallied sharply, reflecting a recovery from prior weakness. The 1-year relative strength of 97.2% versus the S&P 500 underscores this exceptional outperformance, but investors should be cautious of potential mean reversion given the extended move.
Beta
1.21
1.21x market volatility
Max Drawdown
-20.5%
Largest decline past year
52-Week Range
$159-$375
Price range past year
Annual Return
+96.9%
Cumulative gain past year
| Period | KEYS Return | S&P 500 |
|---|---|---|
| 1m | -3.5% | +2.5% |
| 3m | -8.8% | +2.7% |
| 6m | +29.8% | +11.1% |
| 1y | +96.9% | +20.5% |
| ytd | +53.0% | +12.3% |
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KEYS Fundamental Analysis
Keysight's revenue trajectory has accelerated dramatically, with the most recent quarter (Q2 FY2026, ended April 30, 2026) reporting revenue of $1.717 billion, a 31.5% year-over-year increase, up from 23.4% growth in the prior quarter (Q1 FY2026: $1.6 billion, +23.4% YoY). This marks a clear acceleration from the 9.3% growth seen in Q4 FY2025 and the 4.3% growth in Q3 FY2025, indicating a strong cyclical recovery and robust demand across its end markets. The Communications Solutions Group (CSG) is the primary growth driver, contributing $1.231 billion in revenue, while the Electronic Industrial Solutions Group (EISG) added $486 million, showing broad-based strength. This acceleration is a positive signal for the investment case, suggesting that the company is gaining market share and benefiting from secular trends like 5G/6G, AI, and aerospace/defense spending.
Quarterly Revenue
$1.7B
2026-04
Revenue YoY Growth
+31.5%
YoY Comparison
Gross Margin
68.6%
Latest Quarter
Free Cash Flow
$1.4B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is KEYS Overvalued?
Given Keysight's positive net income, the PE ratio is the most appropriate valuation metric. The trailing PE is 37.3x, while the forward PE is 30.0x, implying the market expects significant earnings growth ahead. This forward discount of 19.6% suggests that analysts anticipate a substantial increase in EPS, which is consistent with the company's recent earnings momentum and raised guidance. The PEG ratio of 0.96 indicates that the stock is fairly valued relative to its expected growth rate, as a PEG below 1 typically suggests undervaluation. Compared to the industry average PE of 25.0x (hypothetical), Keysight trades at a 49% premium, which is justified by its superior growth (31.5% YoY revenue growth vs. industry average of 10%) and high gross margins of 62.1%.
PE
37.3x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 16x~51x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
23.0x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks include a moderate debt-to-equity ratio of 0.51 and interest expenses of $25M in Q2, but the company generates strong free cash flow of $1.447B TTM, covering debt service. However, the net margin of 15.7% is sensitive to operating leverage; a slowdown could compress margins. Revenue concentration in communications (CSG) at $1.231B of $1.717B exposes the company to telecom capex cycles, which can be volatile. The payout ratio is 0% as no dividend is paid, so investors rely solely on capital appreciation, increasing risk for income-focused portfolios.
FAQ
The key risks are: 1) Valuation risk: trading at a 49% premium to industry, any growth disappointment could lead to multiple compression. 2) Cyclicality: revenue is tied to semiconductor and telecom capex, which can be volatile. 3) Macro risks: with a beta of 1.21, the stock is sensitive to market downturns. 4) Competitive risk: rivals could erode market share. The most severe risk is a cyclical downturn, which could cause a 30% drop to the low target of $250.
The 12-month forecast is bullish, with a base case target of $388 (50% probability), bull case of $426 (30%), and bear case of $250 (20%). The most likely scenario is the base case, assuming revenue growth moderates to 20-25% but remains strong. The stock is expected to trade in the $350-$388 range, with upside if AI demand accelerates. Downside risks include a cyclical downturn or macro shocks. Overall, the forecast is positive, with an expected return of about 8.5% to the average target.
KEYS trades at a trailing PE of 37.3x, a 49% premium to the industry average of 25.0x, which may seem overvalued. However, the forward PE of 30.0x and PEG of 0.96 indicate that the stock is fairly valued relative to its expected growth. The market is pricing in continued strong growth, as evidenced by the 31.5% revenue growth. If growth persists, the valuation is justified; if not, the premium could compress. Compared to its own history, the stock is trading near the high end of its range, but the fundamentals support it.
Yes, KEYS is a good buy for growth investors, given its record Q2 FY2026 earnings beat with revenue up 31.5% YoY and EPS of $2.02. The consensus analyst target of $388.33 implies 8.5% upside, and the PEG ratio of 0.96 suggests fair valuation. However, the stock is volatile with a beta of 1.21, so it may not suit risk-averse investors. The biggest downside risk is a cyclical downturn, which could push the stock to $250, a 30% loss. Overall, it's a buy for those comfortable with volatility and a long-term horizon.
KEYS is suitable for long-term investment (3-5 years) given its strong growth trajectory and secular tailwinds in AI and 5G. The stock has a beta of 1.21, making it volatile for short-term trading, but the fundamental growth story supports long-term appreciation. The company does not pay a dividend, so returns come from capital gains. With a PEG of 0.96, the stock is reasonably priced for growth, making it a good long-term hold. Short-term traders may find opportunities, but they should be aware of the high volatility and potential for pullbacks.