IPO of the Week: Keysight Technologies

Josef Schuster
Dr. Josef Schuster is the founder of Chicago-based IPOX Schuster LLC and chief architect of the IPOX® Indexes. The IPOX methodology is implemented in an IPO and spin-off strategy at Catalyst Funds. Before founding IPOX, Dr. Schuster pursued his academic work on European IPOs in the Financial Markets Group (FMG) at the London School of Economics (LSE), where he completed his MSc and PhD and conceived the idea to start IPOX. He regularly appears in the media as an expert in global New Listings and respective investment products.

Company Description

Keysight Technologies, Inc

Traced back to 1939 when Hewlett-Packard (HP) was first founded, Keysight Technologies, Inc is an electronic measurement company, headquartered in Santa Rosa, North California. Keysight was the former electronic measurement business of Agilent Technologies, a HP spin-off in 1999. The company provides electronic measurement instruments and systems, related software and software design tools and customer supports and services to the communications, aerospace and defense and industrial, computer and semiconductor test markets.

Business Model

Keysight Technologies generates the majority of revenue from the measurement solutions business, which provides products and related software . The company also generates a small portion from its customer support and services business, which offers repair, calibration, parts-for-sale and resell refurbished used equipment.

Spin-Off History

On 11/3/2014, Keysight Technologies began trading on NYSE followed by its completed separation from Agilent Technologies (NYSE: A) on 11/1/2014. The stock closed the first day of trading at $31.15, with approximately 167 million shares distributed, Keysight was valued at ca. $5.2 billion. Keysight Technologies was included in the IPOX® 100 U.S. Portfolio on 12/19/2014 and currently weighs approximately 1.10%.

Historical Performance

Growth Outlook

Industry Comparison

Company

Stock

Symbol

IPO/Spin-off

Date

Initial
Return

Offer to Date

2019

YTD

Beta to S&P

EPS

2018

Revenue

(in millions)

2018 Net Income

(in millions)

P/E
ratio

Keysight Technologies

KEYS US

Spin-off completed on 11/3/2014

52.24%

1.14

$0.86

3,878.0

165.00

20.0x

National Instruments

NATI US

NI went public on 3/13/1995

-7.12%

0.9

$1.16

1,359.13

155.06

35.0x

Teradyne

TER US

Teradyne went public on 1/13/1978

66.34%

1.34

$2.35

2,100.8

451.78

23.2x

Tektronix

TEK US

Acquired by Danaher in 2007 for $2.8 billion, a 33.56% premium. It’s a subsidiary of Fortive, a Danaher spin-off.

Teladyne Lecro

LCRY US

Lecroy went public on 10/5/1995

Acquired by Teledyne in 2012 for $240 million, a 56.46% premium.