Agilent Technologies (A): Shares forming bullish 'flag'

Posted May 21st 2008 11:30AM by Larry Schutts
Filed under: Earnings Reports, Analyst Upgrades and Downgrades, Cisco Systems (CSCO), Hewlett-Packard (HPQ), Agilent Technologies (A), Merck and Co (MRK), Technical Analysis, Stocks to Buy

Agilent Technologies (NYSE: A) provides electronic measurement and bio-analytical solutions to the communications, electronics, life sciences and chemical analysis industries. Its Electronic Measurement segment offers such instruments as data generators, multimeters, and oscilloscopes. The Bio-Analytical Measurement unit sells instruments, software, consumables and services for quantifying the physical and biological properties of substances. Customers include Cisco Systems (NASDAQ: CSCO) and Merck (NYSE: MRK). The firm was a 1999 spin-off of Hewlett-Packard (NYSE: HPQ).

Agilent pleased investors last week, when it announced fiscal Q2 EPS of 51 cents and revenues of $1.46 billion. Analysts had been looking for 48 cents and $1.43 billion. Management also guided Q3 EPS to 52-56 cents (55 cent consensus), Q3 revenues to $1.44-$1.49 billion ($1.46B consensus), FY08 EPS to $2.07-$2.15 ($2.08 consensus) and FY08 revenues to $5.82-$5.93 billion ($5.83B consensus). Needham subsequently reiterated its "buy" recommendation and boosted its price target to $42. Standard & Poor's raised its Agilent outlook from "stable" to "positive".

The stock popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with three "strong buys", four "buys" and three "holds". Analysts expect a 16% growth rate, through the next year. The Agilent Price to Sales ratio (2.30), Price to Free Cash Flow ratio (17.23), EPS Growth rate (57.00%) and Return on Equity (19.58%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 76% of the outstanding shares. The stock is one of those used to calculate the S&P 500 Index. Over the past 52 weeks, it has traded between $28.79 and $40.42. A stop-loss of $31.15 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

Tags: A, Agilent Technologies, AgilentTechnologies, flag, fundamental analysis, FundamentalAnalysis, momentum, technical analysis, TechnicalAnalysis