Shares of Celestica rise as BMO raises its price target By Investing.com

On Monday, BMO Capital Markets revised its outlook Company Celestica Inc . (NYSE::CN) (NYSE: CLS), a global provider of design, manufacturing, and supply chain solutions, by raising its price target to Cdn$63.00 from Cdn$53.00 previously. The firm has maintained its Outperform rating on the company’s shares.

The revised price target comes after recent investor and management meetings with Celestica, where the company’s position in the market was discussed. BMO Capital highlighted Celestica’s advantageous position to capitalize on the AI-driven hyperscaler, especially given the current acceleration in Telecom demand.

The company also expressed a positive outlook on the stock’s valuation, considering it attractive in relation to Celestica’s end-market exposure. BMO Capital’s stance is supported by the belief that consensus estimates for FY2025, and their forecasts predicting adjusted EPS growth of 9-10%, may be reduced. This is due to strong market demand and margin expansion opportunity.

Celestica’s focus on AI-driven hyperscaler capex is a key factor that makes BMO Capital confident in the company’s future performance. As demand for telecommunications grows, the company expects Celestica to continue to grow and benefit from industry developments.

The target price reflects positive optimism in Celestica’s strategic position and its ability to outperform in its market segment. BMO Capital’s analysis suggests that the company will exceed market expectations and deliver strong financial results in the coming years.

In other recent news, Celestica Inc. has been the subject of several important developments. The company reported strong Q1 2024 performance, with revenue of $2.21 billion and adjusted earnings per share (EPS) of $0.86, driven primarily by the strength of the Capital Equipment Solutions (CCS) segment and demand from hyperscale customers. This strong performance led Celestica to raise its full-year outlook, now expecting a 14% increase in revenue to $9.1 billion and a 36% increase in adjusted EPS to $3.30 in 2024.

Analysts have also criticized the way Celestica works. Stifel raised its price target for Celestica shares to $51.00, citing the company’s strong position in the data center computing and broader industrial markets. However, they have maintained a hold rating on the stock. Meanwhile, the CIBC analyst downgraded Celestica from Outperformer to Neutral, despite raising the stock price to $49. This was due to concerns about the possible decline of the Enterprise segment of the company.

InvestingPro Insights

Thanks to BMO Capital Markets’ updated opinion on Celestica Inc., the latest data from InvestingPro provides more context on the company’s financial health and market performance. Celestica’s management has been busy repurchasing shares, reflecting confidence in the company’s value. This is in line with the significant increase in the stock price over the past six months, as seen by the 88.98% price increase over that period. The company’s P/E ratio stands at 20.64, suggesting that it is trading at a low value relative to its near-term earnings growth.

InvestingPro Tips reveals that Celestica is a dominant player in the Electronics, Instruments & Components industry and has shown strong returns over the past three months, with a total price gain of 26.7%. Analysts are predicting the company’s profit this year, which is evidenced by the profitable performance during the last twelve months. With a market cap of USD 6.62 billion and revenue growth of 10.79% in the last twelve months from Q1 2024, Celestica appears to be well positioned to benefit from the growing demand in its market segments.

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