Shares in Agilent Technologies (A) are down in pre-market trading after third-quarter sales missed analysts’ expectations and the company said it exited July with modest growth across all major markets.
The stock is declining 2.1% to $95.80 in Wednesday’s pre-market session. Agilent’s (A) third-quarter sales fell 1% to $1.26 billion and is below the $1.21 billion estimated by analysts. On an adjusted basis and excluding items, Agilent reported earnings of $243 million or $0.78 per share for the three months ended July 31. Analysts had expected the company to earn $0.66 per share.
Agilent, an equipment maker which serves the life sciences, diagnostics and applied chemical markets, said that although it sees a gradual improvement in lab access for its customers and increased non-COVID-19 testing volumes, it is still not at pre-COVID-19 levels.
“Under challenging conditions created by the global COVID-19 pandemic, Agilent again delivered strong results,” said Agilent CEO Mike McMullen. “While the world’s economies are expected to recover at different rates in the fourth quarter, we remain focused on growth and investing for the future, while effectively managing expenses.”
Separately, Agilent announced that it will invest $150 million to expand it Colorado production facility and add manufacturing lines to more than double the current capacity for manufacturing therapeutic oligos. Oligos, which are short DNA and RNA molecules used to create nucleic acid-based therapeutics, hold the potential to be used in developing treatments for cancer, COVID-19, cardiovascular disease, rare and infectious diseases, and other conditions.
The expansion plans come as Agilent expects the supplier market for therapeutic oligos to exceed $750 million in 2025 with projected double-digit annual growth over the next five years.
Agilent shares have recovered after hitting a low in March and are now up 15% on a year-to-date basis. (See Agilent stock analysis on TipRanks)
Meanwhile, Needham analyst Stephen Unger maintained a Hold rating following the quarterly results, saying that at the price of $97.86, A shares are trading at 27.6x the EPS estimate of $3.54 for the 12-month period ending Aug. 2021, which is within his revised target trading range of 24.0-30.0x.
“Given increased upside potential with the ongoing recovery from COVID-19, we consider the upper half of the range to be fair value (share price of $96.00-$106.00),” Unger wrote in a note to investors.
Overall, Wall Street analysts are cautiously optimistic on the stock. The Moderate Buy consensus is split between 6 Hold and 5 Buys. Meanwhile, the $93.78 average analyst price target indicates downside potential of 4.2% over the coming 12 months.
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