Agilent Technologies hits annual high on 3Q report

NEW YORK (AP) -- Shares of Agilent Technologies Inc. reached an annual high Wednesday as analysts said the scientific instrument maker is improving its profitability.

THE SPARK: Agilent makes electronic measurement and diagnostic machines used in medicine, chemistry and other areas of scientific research. The Santa Clara, Calif., company reported its fiscal third-quarter results after the market closed on Tuesday.

Excluding one-time items Agilent said it earned 77 cents per share. According to FactSet, that was 10 cents more than analysts expected.

Agilent lowered its fiscal-year income and revenue estimates, but announced a new cost-cutting measure and said it will buy back another $500 million in stock. Stock repurchases return cash to shareholders, and they can boost a company's per-share net income by reducing the number of shares on the market.

THE BIG PICTURE: Agilent said its net income fell 35 percent after it took more than $100 million in restructuring and amortization charges. The company said revenue from its biggest division, which serves the electronic measurement market, fell 13 percent to $760 million. However revenue from its life science, chemical analysis, and diagnostic units all improved. Total revenue was unchanged at $1.73 billion, just short of Wall Street estimates.

The company said it will eliminate 450 jobs with the goal of saving $50 million in annual spending, and it expanded its share repurchase to $1 billion from $500 million. Agilent approved the stock repurchase in early 2013 and expects to complete the buyback by the end of the year. The company has bought back more than $200 million in stock this year.

Agilent now expects adjusted net income of $2.70 to $2.85 per share, down from $2.70 to $3 per share, and it cut its revenue estimate by about $200 million, to a range of $6.75 billion to $6.85 billion.

Analysts now expected $2.79 per share and $6.8 billion in revenue on average.

THE ANALYSIS: Jefferies & Co. analyst Brandon Couillard said the company reported "dramatically better profitability trends" in the April quarter. He said Wall Street already expected a new cut to the company's guidance, and the revised outlook reflects the loss of one major electronics customer and less favorable foreign currency exchange rates.

Couillard kept a "Buy" rating on Agilent shares, with a $50 price target, and he has the company on list of recommended stocks.

Cowen and Co. analyst Doug Schenkel said the company's profit margins were strong, and said the expanded share repurchase will support the company's earnings. He rates the stock "Outperform."

SHARE ACTION: Shares of Agilent gained $1.89, or 4.3 percent, to $45.86 in afternoon trading. The stock has gained 7.4 percent in 2013, and earlier Wednesday it rose to $46.49, its highest price since July 2011.