Agilent Says LC Replacement Cycle Is Still Less Than Half Done as Reshoring Deals Jump From 11 to 17
JPMorgan U.S. All Stars Conference fireside chat, September 23, 2026
Agilent Technologies used a fireside chat at JPMorgan's U.S. All Stars Conference to lay out a case that its current growth streak has more room to run than investors may appreciate, with CEO Padraig McDonnell and CFO Adam Elinoff pointing to early-inning replacement cycles, an accelerating reshoring pipeline, and a capital-light CDMO expansion that all argue for durability into 2027. The company has raised both top- and bottom-line guidance in each of the last several quarters, and management framed that momentum as structural rather than cyclical, tied to the Ignite operating model rolled out in late 2024.
Instrument replacement cycle: further from the finish line than the stock implies
The most quantifiable new data point from the session concerned the pace of Agilent's liquid chromatography replacement cycle, which management said is running at roughly a 7-to-8-year duration and remains less than halfway complete despite ten consecutive quarters of book-to-bill above 1 and low-double-digit LC growth last quarter. McDonnell argued the opportunity is broader than headline growth suggests because Agilent's installed base skews old relative to peers and because service quality, not just instrument specs, is driving competitive switching: "It's the number one switching reason, by the way, for any company, around your service capabilities." The gas chromatography cycle is even earlier, at roughly one-quarter complete, and McDonnell sized the combined replacement tailwind at 200 to 300 basis points from LC and another 100 basis points from GC layered onto overall company growth. Notably, China's fleet was flagged as particularly under-replaced post-COVID, an incremental data point that adds a specific growth lever on top of the broader macro recovery story.
Reshoring pipeline derisked: MFN signatories rise from 11 to 17
Agilent's reshoring thesis, first quantified last autumn at a $1 billion market opportunity with roughly one-third capture by 2030, now carries more evidence behind it. McDonnell disclosed that the number of Most Favored Nation pharma deals underpinning that estimate has grown from 11 to 17 since the estimate was first published, which he characterized as derisking the original $300 million capture target rather than requiring an upward revision yet. The company has now booked its first reshoring-related orders, with five of the top ten pharma companies globally signed on, and McDonnell said he has personally visited multiple East Coast sites where instruments are staged in forward-stocking locations ahead of deployment. Roughly 75% of MFN signatories have announced the associated capex, and the vast majority of orders to date are coming from greenfield builds rather than brownfield retrofits, with typical procurement lead times of 6 to 18 months ahead of site launch. Management expects the revenue benefit to become visible in the fiscal first quarter and beyond, a sequencing detail that gives investors a concrete marker to track.
CDMO Train C economics: a clearer roadmap to doubling site revenue
On the Advanced Therapeutics specialty CDMO business, which grew 30% in fiscal third quarter, Elinoff provided fresh detail on how Train C and Train D capacity additions will translate into revenue. Train C comes online in spring 2027 and is already 75% booked for that year; it will take 6 to 8 quarters to ramp to capacity, with Train D following a couple of quarters behind and taking a similar ramp period. When both trains are running at full capacity, the site's revenue would roughly double from today's level to approximately $300 million. Elinoff also flagged a favorable sequencing dynamic: existing capacity fills up in the first half of the fiscal year, with Train C's incremental capacity becoming the growth driver in the back half, which he called "planned very nicely to come online almost at the perfect time." Customer concentration has fallen sharply as a risk factor, with the top three customers now representing less than 50% of demand, down from 80% in 2019, and the mix has shifted to roughly 60% commercial and 40% clinical revenue. Management said recent negative late-stage trial readouts in the broader siRNA space have not changed the 2027 forecast, and reiterated a mid-teens long-term growth rate for the CDMO business. The margin trade-off is explicit: Train C ramp will be dilutive to CDMO margins in 2027 as the company pre-hires and depreciates the asset ahead of full utilization, but Elinoff said this dilution has been planned for and will be offset elsewhere so the company can still deliver its 50-to-100-basis-point annual operating margin expansion target.
AI and autonomous labs: a framework, not yet a revenue line
McDonnell spent considerable time articulating how Agilent is positioning itself around artificial intelligence in the lab, using an analogy that instruments are "the eyes" in the laboratory, physical automation is "the hands," and an agentic software layer is "the brain" running experiments. He argued AI adoption by pharma customers increases rather than decreases demand for analytical tools because faster drug discovery and shorter clinical trial timelines require more testing, more release work, and more QA/QC activity. The company has created an autonomous lab group under its CTO office that works directly with top pharma customers running what McDonnell called "Lighthouse" autonomous lab pilots, describing the engagement model as co-creation rather than specification-taking: "It's not about getting the specifications on an LC and I'm going to bring out a more sensitive LC. It's about how that productivity and workflow is going to increase." He also referenced new connectivity models from Anthropic as removing technical barriers to linking AI agents directly with instruments. Importantly, McDonnell was candid that the space remains undefined: "Anybody that can say that the autonomous lab is defined and everybody knows what it's going to be, I can tell you from talking to our customers, it's not." This is a strategic framework under construction rather than a quantified near-term revenue opportunity, and investors should treat it as such.
China: broad-based strength, but management stops short of calling an inflection
China delivered double-digit growth in pharma and food and high-teens growth in Advanced Materials last quarter, prompting an upward guidance revision for the region to high-single-digit growth in the fourth quarter from a flat start-of-year assumption. McDonnell attributed the strength to decades of direct sales presence and a newly opened innovation center rather than pure market recovery, and cited China's 15th five-year plan pharma targets, a market he sized at $250 billion with $2 billion of targeted growth, as a multi-year tailwind. Management was careful to frame this as share gains within an improving market rather than a definitive macro inflection, with McDonnell stating explicitly that the company is "not calling an inflection point yet." Long term, China is expected to be a mid-to-high-single-digit grower for Agilent.
Europe guide cut and academic softness: context more than concern
Europe's full-year guide was lowered last quarter, which Elinoff attributed primarily to difficult year-over-year comparisons — low single-digit growth against a high-single-digit prior-year comp in the third quarter, stepping up to a low-double-digit comp in the fourth quarter — with some incremental guidance conservatism tied to the Middle East conflict. Academic and government end markets remain a smaller, muted exposure, with U.S. academic and government spending described as "stable but muted" and direct NIH exposure below 1% of total revenue. European academic and government spending has grown mid-single-digits year-to-date but faces budget crowding from rising defense spending, while China's academic and government business declined in the third quarter against a tough 20% prior-year comp, with mid-single-digit growth expected to resume over time.
Capital allocation: Biocare as the template, no transformative deal on the table
On M&A, McDonnell pointed to the recent Biocare acquisition, which added over 300 antibodies to the pathology franchise, as the template for future deals: strategically aligned, recurring-revenue heavy, and integrable through the commercial engine built under Ignite. He outlined four screening criteria for deals — strategic fit, right to win, appropriate price, and cultural compatibility — and was unambiguous about scale expectations, stating flatly, "We won't be doing a transformative deal." Areas of interest include software and recurring-revenue bolt-ons around the company's core analytical platforms, along with partnerships tied to physical AI and autonomous lab capabilities, including deals sourced through Agilent's China innovation center, where the company recently fulfilled a large lab buildout order for a domestic autonomous lab operator.
Margin trajectory: tariff refunds are the swing factor to watch
Elinoff was explicit that the company's margin commentary for next year should be viewed excluding one-time tariff refunds received this year, a distinction management flagged repeatedly to avoid investors extrapolating an inflated base. The company delivered over 100 basis points of operating margin expansion this fiscal year despite tariff headwinds and a tax headwind, which McDonnell attributed partly to roughly 200 basis points of pricing actions that he described as a compounding, durable capability rather than a one-time lever.