A couple of catalysts could propel shares of Keysight Technologies higher, according to JPMorgan. The firm upgraded the maker of electronics test equipment to overweight from neutral and hiked its price target to $200 from $170, which implies around 20% upside from Friday’s close. Analyst Samik Chatterjee sees a broader recovery through 2025 in the company’s end markets, which he said have faced challenges over the course of this year due to “higher capital costs, lower underlying industry growth and inventory digestion in certain markets.” “We envision a broadening out of the demand drivers beyond the narrow focus and investment on AI, which when put against the backdrop of lower interest rates is likely to be driven by higher spending appetite from customers that have been cautious over the last year,” the analyst wrote to clients. On top of that, Chatterjee sees the company having “robust” organic incremental margins as a result of its recent acquisition with Spirent Communications , which he believes will help put it on a path to meeting its long-term margin target of 31% to 32%. The deal is expected to be completed in the first half of Keysight’s fiscal 2025. “The anticipated closure of the Spirent acquisition enhances Keysight’s leverage to this recovery, with operational synergies expected to drive margin improvements, helping the company progress towards its long-term operating margins target,” the analyst also said. This comes as 10 of the 13 total analysts covering the name have a strong buy or buy rating, according to LSEG. Its average target of $179.43 reflects nearly 8% upside from here. Following the upgrade, shares of Keysight rose more than 2% in premarket trading on Monday. The stock has risen more than 4% in 2024 and more than 11% over the past month.
