Agilent Technologies A shares have returned 11% in the past year, lagging the broader Zacks Computer and Technology sector’s 29.8% rise, and the Zacks Electronics - Testing Equipment industry’s 12% growth.

Agilent's underperformance is largely attributed to struggles in key end markets, including Pharmaceutical, Food, Academic and Government, and Environmental and Forensics. These domains saw significant downturns in the fourth quarter of fiscal 2024, raising concerns about the company's forecast and impacting its overall prospects.

Pharmaceutical remains Agilent's largest revenue contributor, accounting for 35% of total revenues, though it has decreased 1% year over year. Meanwhile, the Food, and Environmental and Forensics segments experienced more pronounced year-over-year declines of 3% and 6%, respectively.

A’s Subdued Outlook Affects Estimate Revisions

For the first quarter of fiscal 2025, the company expects revenues between $1.65 billion and $1.68 billion, indicating a reported decline of 0.5% to growth of 1.3%.

The Zacks Consensus Estimate for first-quarter fiscal 2025 revenues is pegged at $1.67 billion, suggesting a year-over-year increase of 0.56%.

Non-GAAP fiscal first-quarter earnings are expected to be $1.25-$1.28 per share. The Zacks Consensus Estimate stands at $1.27 per share, implying a 1.55% year-over-year decline and an 8% decrease over the past 60 days.

For fiscal 2025, A revised its revenue guidance to $6.79-$6.87 billion.

The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $6.83 billion. This suggests moderate growth of 4.94% from the year-ago quarter’s reported figure.

Fiscal 2025 non-GAAP earnings are expected to be $5.54-$5.61 per share. The consensus mark for the same is pegged at $5.56, down 2.8% over the past 60 days, indicating a 5.10% increase from fiscal 2024 earnings.

Slowing Segmental Growth, Macroeconomic Hurdles Hit Agilent

The Life Sciences and Applied Markets Group segment, which accounts for half of the company’s total revenues, experienced a year-over-year decline of 1% in the fourth quarter of fiscal 2024. This decrease was mainly driven by slower sales of instruments, as customers became more cautious and reduced spending on new equipment.

The decline in the Diagnostics and Genomics Group segment is raising concerns, with a 1% drop on a reported basis and a 3% decline on a core basis for the fourth quarter of fiscal 2024. This downturn was mainly driven by expected softness in cell analysis instruments and NASD.

The combination of macroeconomic pressures and regulatory challenges in China has significantly influenced Agilent's financial performance and strategic decisions. The ongoing trade dispute between the United States and China remains a key concern, potentially affecting the company’s operations and market dynamics in the region. These factors contribute to uncertainties around the company's top-line growth since China is its second-largest customer market.

Zacks Rank & Stocks to Consider

A currently carries a Zacks Rank #4 (Sell), which implies investors should stay away from the stock for the time being.

Okta OKTA, Docusign DOCU and BWX Technologies BWXT are some better-ranked stocks in the broader tech sector. Each of these three companies currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rates for OKTA, DOCU and BWXT are pegged at 23.75%, 9.42% and 9.35%, respectively.

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Agilent Technologies, Inc. (A) : Free Stock Analysis Report

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