Keysight Technologies is underrated and ready to grow within more technology spaces than the market has given it credit for, Wells Fargo said Thursday. Aaron Rakers initiated Keysight with an overweight rating, calling it an "instrumental play on digital transformation." HIs price target of $200 implies upside of nearly 20%. "We think KEYS is an underappreciated high-quality earnings story that should prove more resilient amid increasing macro uncertainty," he said in a note to clients. Rakers said the company has the potential to increase margin by bringing up software mix. But what really jumps out is its diversification, he said. The manufacturer of electronics test and measurement equipment and software has more than 7,000 products that span wireless and wired communications, aerospace, defense and next-generation autos. It has more than 32,000 end customers and more than 17,500 direct customers. No customer accounts for more than 10% of revenue. It was spun out from Agilent Technologies, which Rakers said did not invest in the company enough for it to reach its potential. Long-term drivers including increasing needs around electric vehicles, 56/6G and semiconductors will provide a boost to the company and help it work through backlogs currently worrying investors, he said. "The depth and breadth of Keysight's product portfolio and customer base is alone a key competitive differentiation, in our opinion," he said. "Although the company has been consistent in communicating the diversity of its business to investors, we think a large part of the investor base has been attracted to the 5G opportunity in which Keysight participates. We think this creates an attractive long-term investment opportunity as we believe investor sentiment fails to fully appreciate the dynamics of the rest of the company's target markets." To be sure, the company faces the risk of not being able to gain further market growth or increase margins. Changes in component prices could also impact the company. — CNBC's Michael Bloom contributed to this report.