Agilent Technologies (A)
Instrumentación analítica y diagnóstico de laboratorio
Agilent is a global provider of instruments, software, services, and consumables for life sciences, diagnostics, and applied markets laboratories, with a recurring services business (CrossLab) that accounts for ~42% of revenue and a return on invested capital of ~16%, comfortably above the 10% bar. At USD148.24 — near its 52-week high after a strong recovery — the price already reflects much of the recent improvement: with the disciplined exit multiple from the medical technology band (16-22×), the base scenario is Overvalued and yields -3% in total annual return.
- Price
- $154.81
- Intrinsic value (5y, base)
- $130
- Total annual return (5y)
- -2.7%
- Status (nominal)
- Overvalued
- Margin of safety
- No margin
The essentials
- The CrossLab services and consumables business (~42% of revenue) grows with the installed base and cushions the cyclicality of the instruments business.
- Current guidance for fiscal year 2026 (revenue of USD7.39-7.49bn, +6.3%/+7.8% reported) anchors the base scenario's growth path.
- At ~30 times trailing-twelve-month net income, the price already trades above the ceiling of the medical technology band (22×); much of the return depends on execution offsetting multiple compression.
Intrinsic value — two valuation methods
Total return at 5 years: -2.7%/year = -3.6% appreciation + 0.8% dividend. The target price ($129) is ex-dividend; the $6 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $112 · Multiples $109) is below the market price ($155).
Pillars of the analysis
The verdict — today vs 5 years
Today — expensive, no margin of safety: at $155 trades ~42.3% above its value discounted to today (~$109); the expected return does not even reach the risk-free rate (4.5%).
At 5 years — Sobrevalorado: the expected total return is negative — the price already discounts a demanding scenario that, if not met, results in a loss.
The bridge: the return at 5 years falls below the risk-free rate (4.5%) — which is why there is not even a discount to today's value. To require a 15% annual return, it would need to be bought at ~$68.
Thesis
The business
Agilent combines a cyclical instruments business with a recurring services and consumables business (CrossLab, ~42% of revenue), backed by genuine product leadership in gas chromatography and a strong position in liquid chromatography and mass spectrometry. Return on invested capital (~16%) comfortably exceeds the 10% bar, and the company is in a recovery cycle following the FY2023-FY2024 instrumentation contraction, with raised guidance for FY2026.
The valuation
It is valued by P/E on projected net income, with the terminal exit multiple anchored in the medical technology archetype band (16-22×, §4). The base scenario uses 19× on year-5 net income, resulting in a 5-year value of $129 per share and a total annual return of -3% against a price of $155.
The margin of safety
No margin of safety: the price already discounts a demanding scenario. At a current entry multiple of ~30 times net income — above the ceiling of the disciplined medical technology band — the method's margin of safety is limited in the base scenario and only appears clearly in the favorable scenario, if execution sustains growth and expands the margin beyond guidance.
What to watch
The central disconfirmer is the multiple: if core growth falls below the 4.5% guided for FY2026 or the operating margin fails to reverse the 200-basis-point decline of FY2025, multiple compression toward the 16-22× band finds no offset in fundamentals, and the return deteriorates toward the adverse scenario.
Educational / informational. Does not constitute investment advice.