Moody’s turns Keysight view to positive

Moody’s Investors Service said it revised its outlook for Keysight Technologies Inc. to positive from stable and affirmed its Baa2 senior unsecured and issuer ratings.

“The positive outlook reflects Moody's expectation that despite near-term revenue declines in the commercial communications end market, Keysight's other verticals, particularly automotive and defense, will provide offsetting revenue growth. Moody's expects that revenues from commercial communications (about 45% of total Keysight revenues for the quarter ended April 30, 2023) will decline over the near term due to reduced end-market demand at smartphone and PC customers. Consequently, Moody's expects that Keysight will generate revenue growth only in the low single digits percent level over the next 12 to 18 months,” the agency said in a press release.

The improved outlook also reflects a forecast for Keysight to complete is acquisition of ESI using balance sheet cash. “This acquisition will increase Keysight's software revenues from about 21% of total revenues to 23%, expanding this more predictable, high-margin revenue stream,” Moody’s said.

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