Agilent Technologies, Inc. (A) Earnings & Analysis

Latest quarter

Agilent reported Q3 FY2026 revenue of $1.9 billion, up 8.06% from $1.7 billion a year earlier. The company reported adjusted EPS of $1.62, above the consensus of $1.48, while revenue of $1.9 billion exceeded the consensus of $1.8 billion. Agilent also reported diluted EPS of $1.28, compared with $1.18 in Q3 FY2025.

The filing says revenue growth came from all segments, geographic regions and most key end markets. Life Sciences and Diagnostics Markets revenue increased 11%, Agilent CrossLab revenue increased 6%, and Applied Markets revenue increased 7% from a year earlier. The filing attributed gross-margin improvement to higher sales volume, tariff refunds, targeted price increases, business mix, lower intangible amortization and lower restructuring expense, partly offset by wage increases and variable pay.

Agilent reported a 55.5% gross margin and a 23.6% operating margin, compared with 51.1% and 20.7%, respectively, a year earlier. Free cash flow was $439.0 million, compared with $259.0 million a year earlier. The company said Q3 revenue came in above its own guidance.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Parag McDonnell said pharma grew 12% in Q3, chemicals and advanced materials grew 7%, and diagnostics and clinical grew at the high end of the mid-single-digit range. McDonnell said China revenue grew 9%, versus the company’s expectation for flat growth, driven by commercial-account execution in pharma and food. He also said underlying pathology orders grew at a double-digit rate, while diagnostics and clinical revenue growth was below the company’s high-single-digit expectation.

McDonnell said the company’s strategic pricing initiatives delivered approximately 200 basis points in Q3 and had surpassed its initial full-year target of more than 100 basis points. Chief Financial Officer Adam Elanoff said Q3 operating margin was 27.2% excluding tariff refunds, up 210 basis points from a year earlier, and attributed the increase to gross-margin performance and Ignite efficiencies. Elanoff said pricing, supply-chain management, productivity and inventory management were being used to address inflationary pressures.

McDonnell said Agilent secured initial pharmaceutical reshoring orders in Q3 and expected more meaningful order benefit around year end, with revenue contributions building in fiscal 2027 and beyond. In response to analysts’ questions about the Advanced Therapeutics Division, Elanoff said Train C was expected to begin generating revenue in the spring and ramp to full capacity over the following six to eight quarters. Life Sciences and Diagnostics Markets Group President Simon May said 75% of the available FY2027 Train C capacity was spoken for with purchase orders.

Elanoff said fourth-quarter Advanced Therapeutics Division growth was expected to be flat because of the timing of customer regulatory-submission responses near quarter end and a comparison of more than 40% growth. When analysts asked about 2027, Elanoff said Agilent would not provide guidance for that year at this stage.

Guidance

Agilent raised its FY2026 reported-revenue outlook to $7.49 billion to $7.51 billion, representing 7.8% to 8.1% reported growth and 5.8% to 6.0% core growth. The company raised FY2026 non-GAAP EPS guidance to $6.18 to $6.21 from $6.00 to $6.10, including the third-quarter tariff-refund benefit; it expects $6.12 to $6.15 excluding tariff refunds. Elanoff also raised the ex-tariff-refund operating-margin expansion target to more than 100 basis points at the midpoint from 85 basis points. Agilent expects Q4 revenue of $1.98 billion to $2.0 billion and EPS of $1.71 to $1.74.