Tickers in this Article: A, BRKR, ARX, DHR, WAT, TER, LIFE
It really was not so long ago that electronic measurement, chemical analysis and life sciences conglomerate Agilent (NYSE:A), was overlooked, under-followed and trading at a discount to its intrinsic worth. The market is always changing, though, and Agilent now trades much more like a popular growth company with multiple revenue drivers.

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A Strong Second Quarter
Inherent to the Agilent structure is the idea that the more stable life sciences group can offset the more cyclical electronic measurement business. Right now, though, both are doing quite well. Total revenue rose 32% in the second quarter, or 21% on an organic basis. Growth was led by the chemical analysis growth, with a 60% jump in reported revenue, though life sciences and electronic measurement did fine at 39% and 19%, respectively. Order growth of more than 26% (18% organic) was also encouraging, though this number seems to be decelerating.

Gross margin did decline on a year-over-year basis (55.4% versus 56.9%), one of the few blemishes of the quarter. Operating income, though, grew more than 61% and the operating margin jumped three and a half points on controlled SG&A and R&D spending. Agilent still spent close to 10% of its revenue on R&D, though, so it is not as though Agilent is robbing the future for present growth.

Measurement Measuring Up
Although it involves a fair bit of technology, the electronic measurement industry is a cyclical one. With the economy on the rebound, this segment is rebounding as well - but also getting a boost from the better growth in markets like cellphone handsets. Agilent certainly isn't alone here. It competes with other large names like Danaher (NYSE:DHR), Aeroflex (NYSE:ARX) and Teradyne (NYSE:TER). Agilent has been losing business to Aeroflex in the handset test business, but the company certainly isn't giving up and 4G/LTE handsets could be an opportunity to shake up market shares.


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Life Sciences a Growth Opportunity
Agilent's opportunities in life sciences should not be overlooked. Admittedly, there is a cyclical aspect to the "big iron" life sciences equipment that Agilent sells, and current growth and sales rates will not be sustainable. That said, companies like Agilent, Bruker (Nasdaq:BRKR) and Waters (NYSE:WAT) are making hay while the sun shines - enjoying the fruits of stimulus spending, grant funding and new product introductions.

Along the way, the company seems to be building some real leadership in segments like mass spec, NRM, chromatography and genomics. True, Bruker, Waters, Thermo Fisher (NYSE:TMO) and Life Technologies (Nasdaq:LIFE) have the same plan to build their brands and grow these businesses, but Agilent does have above-average technology. Assuming that Agilent can continue to build this business, it should offer long-term growth prospects ahead of the company's historical averages.

The Bottom Line
Unfortunately for investors new to, or outside of, the Agilent story, the shares have rebounded very solidly. It is still a good stock to hold on to (at least for patient investors), but new money should seek out better bargains and bigger discounts to fair value.

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