17 May

Margin and Tax Rate Estimates for Agilent Technologies

WRITTEN BY Margaret Patrick

Margin estimates

Agilent Technologies’ (A) gross margin expanded by 56 basis points YoY (year-over-year) to 56% in the second quarter, driven by higher productivity and economies of scale in its ACG (Agilent Cross Lab Group) segment. In the second quarter, the company’s operating margin improved by 60 basis points to 21.9%, driven by optimal cost management.

Analysts expect Agilent’s gross margin to expand by 209 basis points YoY to 56.77% in fiscal 2019, 34 basis points YoY to 57.10% in fiscal 2020, and 35 basis points YoY to 57.45% in fiscal 2021. In fiscal 2019, they expect its gross margin to expand 203 basis points YoY to 56.97% in the third quarter, and 307 basis points YoY to 57.86% in the fourth quarter.

Agilent is focused on shifting its manufacturing bases to remediate tariffs. However, despite these efforts, the company expects a tariff impact of $0.75 million–$1.0 million in the second half of 2019 due to US tariffs being raised from 10% to 25% on Chinese imports.

Margin and Tax Rate Estimates for Agilent TechnologiesTax rate

In its second-quarter investor presentation, Agilent reduced its fiscal 2019 non-GAAP tax rate guidance from 17% to 16.75%. In the second quarter, Agilent’s tax rate fell by 132 basis points YoY to 16.51%. In fiscal 2019, analysts expect the company’s tax rate to reduce by 125 basis points YoY to 16.86% in the third quarter, and 323 basis points to 16.86% in the fourth quarter. They expect Agilent’s tax rate to be 16.80%, 16.74%, and 16.45% in fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

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