BofA Securities has upgraded Keysight Technologies shares to Buy from Neutral and raised its price target to $340 from $195, citing stronger-than-expected order growth and improved earnings guidance. The test and measurement company’s stock surged to $300.35, delivering a 47% return over the past six months and trading near its 52-week high.
According to BofA analyst David Ridley-Lane, the upgrade follows Keysight’s impressive first fiscal quarter performance, which ended in January. The company reported core orders grew 22% year-over-year, significantly exceeding BofA’s 11% growth expectation, with order strength broad-based across all business segments.
Keysight Technologies Raises Earnings Guidance
Keysight Technologies has substantially increased its fiscal 2026 framework for adjusted earnings per share growth to more than 20% year-over-year, up from a prior outlook of more than 10%. The revised guidance implies adjusted EPS of $8.59 or higher for fiscal 2026, which surpasses the $8.11 consensus estimate among analysts.
The company’s first-quarter results exceeded market expectations across key metrics. Keysight achieved earnings per share of $2.17, beating the forecasted $2.00, while revenue reached $1.6 billion, higher than the anticipated $1.54 billion.
Premium Valuation Reflects Market Leadership
BofA’s new $340 price target is based on 33 times the firm’s raised 2027 adjusted EPS estimate, compared to its previous target based on 21 times earnings. The firm noted that the 33 times multiple represents a premium to the 31 times peer average in the test and measurement sector.
According to BofA, the premium valuation reflects Keysight’s above-average margins and industry-leading market share in test and measurement equipment. However, the stock currently trades at a P/E ratio of 59.84, and some market analysis suggests the shares may be overvalued at current levels.
Strong Order Growth Drives Analyst Optimism
The 22% year-over-year increase in core orders during the first fiscal quarter represents a significant acceleration from recent trends. Additionally, Keysight provided a robust second-quarter outlook, forecasting adjusted earnings per share and revenue above analyst estimates.
Meanwhile, UBS has also responded to these developments by raising its price target for Keysight Technologies from $230 to $340 while maintaining a Buy rating. The firm cited the strong first-quarter results and unexpectedly robust second-quarter outlook as key factors supporting the increased valuation.
Market Position and Competitive Advantages
Keysight’s performance underscores its strong position in the test and measurement industry, where it maintains significant market share. The company’s ability to deliver above-average margins while driving substantial order growth demonstrates its competitive advantages in serving customers across multiple sectors.
However, investors should note that with the stock trading near its 52-week high and at elevated valuation multiples, future returns may depend heavily on the company’s ability to execute on its raised guidance. The test and measurement sector’s cyclical nature also presents potential headwinds if economic conditions deteriorate.
Investors will be watching Keysight’s second-quarter results closely to confirm whether the strong order momentum continues and if the company can deliver on its ambitious fiscal 2026 earnings targets. The next quarterly report will provide crucial insights into whether the current premium valuation is justified by sustained business performance.