Agilent upgraded to Buy at UBS on growth outlook

[Electronics Firm Agilent To Sell Chip Unit For $2.66 Billion]
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Agilent Technologies (NYSE:A [https://seekingalpha.com/symbol/A]) traded higher on Wednesday after UBS upgraded the stock to Buy from Neutral, arguing that the U.S. life sciences company is poised to maintain its growth leadership, outperforming peers in terms of multiple expansion.

Analyst Dan Leonard listed three main growth drivers powering Agilent (NYSE:A [https://seekingalpha.com/symbol/A]), including the recovering pharma investments that can boost its instrument portfolio and a demand uptick for mid-range analytical instruments in China, thanks to factors such as rising pharma licensing deals.

Additionally, based on recent management and peer remarks as well as an analysis of upcoming oligonucleotide therapeutics reaching the market, Leonard argued that the company’s Nucleic Acid Solutions Division is poised to grow attractively in the years ahead.

“While our forecasts are in line with Street (~5.5% sales CAGR through 2027), investors don't appear to be giving enough credit to Agilent's longer-term growth sustainability, notably across the three aforementioned areas,” the analyst wrote.

UBS raised its price target on Agilent (NYSE:A [https://seekingalpha.com/symbol/A]) to $170 from $130 per share, assuming an EV/EBITDA multiple of ~21x (~16.5x previously) in terms of Oct. 27E TTM EBITDA, about a 17% premium to that of peers (unchanged from previous estimate).

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