Keysight falls despite guidance raise; analysts spy tariff headwinds

Keysight Technologies (NYSE:KEYS) reported third quarter results and guidance that exceeded expectations post-market on Tuesday, but analysts said tariff headwinds remain a concern.

Shares of the electronic designs and test solutions company had slipped 4% during market action on Wednesday.

"The August US reciprocal tariffs are an additional $75mn annualized gross headwind (now $150-175mn in total)," said Bank of America analysts, led by David Ridley-Lane, in a Wednesday investor note. "Management expects countermeasures to fully offset these (on a dollar-for-dollar basis) by 2QF26. Despite the incremental tariff costs in 4Q, management raised the FY25 framework to ~7% y/y revenue growth (from ~6% prior) and 13% y/y adj. EPS growth (from >10% prior)."

BofA noted that while demand has troughed, the extent and pace of a rebound remain uncertain.

"We forecast $1.475bn for 4Q orders," Ridley-Lane said. "This is below the median historical +11.6% q/q growth and would be ~8% y/y core growth."

BofA reiterated its Neutral rating and $179 price target.

Keysight CEO Satish Dhanasekaran said demand for artificial intelligence infrastructure is bolstering demand.

"The emerging AI ecosystem is fueling massive growth in digital infrastructure, which in turn drives the need for rapid innovation across the technology stack," Dhanasekaran said during Tuesday's earnings call. "To meet this challenge, we're delivering advanced physical layer solutions and new silicon photonics capabilities that enhance R&D workflows and address customers' signal integrity and performance requirements."

Keysight competitors such as Fortive (FTV) and Anritsu (OTCPK:AITUF) were down 1% and 4%, respectively.