After divesting from Hewett-Packard in 1999, Agilent Technologies Inc. (NYSE:A) has rapidly expanded its reach and now has clients across the communications, life sciences, and chemical analysis sectors. The company manufacturers a wide variety of products including DNA microarrays, nuclear magnetic resonance, and vector network analysers. The products are often unique to individual customers, generating a strong bond between the company and its customers as only Agilent Technologies Inc. (NYSE:A)’s engineers are trained to service the individual products.
Agilent Technologies Inc. (NYSE:A) competes in the electronic measurement business. Its chief competitors include Thermo Fisher Scientific Inc. (NYSE:TMO) and Life Technologies Corp. (NASDAQ:LIFE).
Thermo Fisher Scientific Inc. (NYSE:TMO) is specifically geared towards biotech, pharmeceuticals and the general healthcare market, while Life Technologies Corp. (NASDAQ:LIFE) primarily provides life sciences products. Life Technologies Corp. (NASDAQ:LIFE) has a rich patent portfolio, which lends it significant advantages; however, it is playing catch up in the international marketplace as it is only now expanding its operations in the BRIC countries. Thermo Fisher Scientific Inc. (NYSE:TMO) on the other hand has a much wider global reach, although over the last couple of years it has struggled to achieve significant income growth, despite increasing sales.
Electronic measurement is a very difficult market to enter due to the highly skilled labor that is needed. Agilent Technologies Inc. (NYSE:A) has the pick of the crop of engineers and researchers with experience in electronic measurement, as it is the market leader in many of the core categories associated with it. The company spent $700 million over the last twelve months (just over 10% of revenue) on research & development, reinforcing its competitive image.
Agilent Technologies Inc. (NYSE:A) has quickly expanded into the developing countries, taking advantage of the rapid growth seen there. In excess of 30% of its revenues come from Asia, notably India and China, while over 70% of its revenues come from a wider international consumer base. From an international standpoint, Agilent Technologies Inc. (NYSE:A) is the market leader and has a solid head start over its competition. However, this large exposure in fast growing economies is also very risky due to the foreign exchange fluctuations seen in many of these countries.
Over the last couple of years, Agilent has managed to cut costs and increase its profit margins. Its trailing earnings of $2.88 per share is a vast improvement over the $0.09 loss it reported in 2009 and significantly better than the $1.94 recorded in 2010.
Its higher earnings are due to the company streamlining the supply chain and its divesture of poorly performing assets along with a variety of other cost cutting measures. This has also allowed the company to become more cost competitive, leaving it less exposed to global economic conditions and price shocks.
Financials
Agilent closed for the weekend at $44.23, just 7.3% off its 52-week high, equating to a market capitalization of $15.26 billion. The firm’s share price has fluctuated between $35.32 and $47.47 over the last year.
