Morgan Stanley has advised investors to take advantage of the lower valuation of Keysight Technologies by recommending to “buy the dip” on the stock. The firm upgraded the technology stock from equal weight to overweight, setting a price target of $165 per share. This suggests a potential upside of approximately 24% compared to the previous closing price of $133.12. Although the stock has experienced a decline of over 22% since the beginning of the year, with a significant portion occurring in the last three months, Morgan Stanley believes that this represents a buying opportunity for investors.
Analyst Meta Marshall sees the downturn in Keysight stock as a chance for investors to benefit from the company’s potential for double-digit earnings and its “defensive nature.” Marshall believes that Keysight should command a premium in the test & measurement industry and trade in line with other industrial tech comparables due to its attractive end-market exposures, strong management team, and potential for double-digit earnings growth. The analyst also points out Keysight’s significant exposure to both 5G and artificial intelligence trends, which will likely contribute to the company’s long-term growth of 5% to 7%.
Moreover, Marshall factors in the potential for margin leverage and envisions a pathway to double-digit earnings growth beginning in FY25. Given these factors, Marshall views Keysight’s current valuation (17x FY24 / 15x FY25) as too cheap and recommends buying the dip in order to take advantage of the potential future growth. Overall, Morgan Stanley believes that the current decline in Keysight stock provides an opportunity for investors to benefit from its cheap valuation and expects it to perform well in the long run.