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Non-Tech : Kirk's Market Thoughts
COHR 185.70+2.2%3:59 PM EST

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To: Kirk © who wrote (1224)5/12/2014 5:15:38 PM
From: Brian Sullivan1 Recommendation

Recommended By
Kirk ©

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Morningstar upgrades Agilent - A

quotes.morningstar.com

Spun out of Hewlett-Packard in 1999, Agilent has evolved into a global measurement giant. Through a series of acquisitions and divestitures, most recently in the life sciences arena, Agilent has transformed from a small technology startup into a leading health care firm. Today, Agilent uses its unmatched technological expertise and global reach to serve a broad base of customers across the communications, electronics, life sciences, and chemical analysis industries. Agilent will spin off its electronics segment in late 2014 under the name Keysight Technologies.

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We’re increasing our fair value estimate for Agilent to $62 per share from $49 after boosting our margin expansion assumptions. Our model still incorporates nearly 6% annualized growth over the next five years, but we think organic earnings can grow nearly 9% over the same time frame thanks to operating leverage and efficiency efforts. We previously forecast earnings growth roughly in line with top-line performance. Our valuation implies a price to earnings multiple of 20.

Our 6% annualized growth results from double-digit growth in the Agilent’s life sciences division offsetting further weakness in the electronics measurement segment. We expect solid mid-single digit growth in the chemical analysis business as the market continues to recover from recent customer budget constraints. A rising contribution from emerging markets should also help boost Agilent’s overall growth trajectory.
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