Agilent Technologies (A) Jefferies Global Healthcare Conference summary

Financial performance and outlook

• Q2 revenue met expectations, down 7%, with bottom line leverage exceeding expectations at a 4% decline.

• Positive book-to-bill for the third consecutive quarter; first order growth in seven quarters.

• Orders grew across all groups, especially with NASD included; all regions except China saw instrumentation order growth.

• Guidance was revised downward due to slower-than-expected order growth and market recovery, with no China stimulus or pharma budget flush factored in.

• Long-term growth algorithm of 5%-7% remains intact, assuming 3%-5% market growth.

Market dynamics and regional trends

• China remains a headwind, with sequential declines mainly in food, environmental, and academia, but chemical and advanced materials grew.

• Increased bid activity in China signals potential stimulus impact, but funds have not yet been released; benefit may materialize late 2024 or 2025.

• Stimulus expected to be broader, benefiting academia, government, pharma, industrial, and semicon sectors.

• Recovery seen in Europe and the U.S. for LC and LC-MS businesses; Southeast Asia also strong.

• Pent-up demand for instrument replacement, with a refresh cycle likely to begin late 2024 or more in 2025.

Business segments and growth drivers

• NASD clinical trial programs at record highs, with clinical volume expected to grow over 50% year-on-year.

• Commercial NASD volume down due to slower ramp, not product issues; inventory management cited.

• Customer base for NASD is diversifying, with more clinical trial customers and expanding oligo applications.

• Services business and applied markets (PFAS, semicon, batteries) are increasing contributors to growth.

• Investments continue in high-growth areas: PFAS ($250M, double-digit growth), semicon ($300M, >50% share), and batteries ($200M market).