Argus analyst Jim Kelleher has revised the price target for Celestica (CLS, Financial) from $150 to $120, while reiterating a Buy rating for the company's shares following its impressive first-quarter earnings and revenue performance. Celestica is seeing benefits from its strategic diversification into high-growth, high-margin sectors, along with advancements in artificial intelligence and machine learning. Despite a downturn in shares due to a market shift away from businesses involved in the generative AI sector, Celestica's demand fundamentals remain strong, and the company is experiencing expanding margins.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Celestica Inc (CLS, Financial) is $118.44 with a high estimate of $150.00 and a low estimate of $101.00. The average target implies an upside of 34.96% from the current price of $87.76. More detailed estimate data can be found on the Celestica Inc (CLS) Forecast page.
Based on the consensus recommendation from 14 brokerage firms, Celestica Inc's (CLS, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Celestica Inc (CLS, Financial) in one year is $40.34, suggesting a downside of 54.03% from the current price of $87.76. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Celestica Inc (CLS) Summary page.
CLS Key Business Developments
Release Date: April 25, 2025
- Revenue: $2.65 billion, up 20% year-over-year.
- Adjusted EPS: $1.20, exceeding guidance and up 45% year-over-year.
- Adjusted Operating Margin: 7.1%, highest in company history.
- Adjusted Gross Margin: 11.0%, up 110 basis points.
- Adjusted ROIC: 31.5%, up 770 basis points.
- ATS Segment Revenue: $807 million, up 5% year-over-year.
- CCS Segment Revenue: $1.84 billion, up 28% year-over-year.
- HPS Revenue: Grew by 99% to over $1 billion, 39% of total revenue.
- Free Cash Flow: $94 million, up $26 million year-over-year.
- Cash Balance: $303 million at quarter-end.
- Gross Debt: $887 million.
- Net Debt: $584 million.
- Capital Expenditures: $37 million, 1.4% of revenue.
- Share Repurchases: $75 million during the quarter, $115 million year-to-date.
- Q2 2025 Revenue Guidance: $2.575 billion to $2.725 billion.
- Q2 2025 Adjusted EPS Guidance: $1.17 to $1.27.
- 2025 Revenue Outlook: Raised to $10.85 billion, 12% growth year-over-year.
- 2025 Adjusted EPS Outlook: Raised to $5 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Celestica Inc (CLS, Financial) reported strong Q1 2025 performance with revenues of $2.65 billion and adjusted EPS of $1.20, both exceeding guidance.
- The company's adjusted operating margin reached a record high of 7.1%, driven by strong demand in both CCS and ATS segments.
- CCS segment revenue increased by 28%, fueled by high demand for networking switches, particularly from hyperscaler customers.
- ATS segment revenue grew by 5%, surpassing expectations due to significant growth in the capital equipment business.
- Celestica Inc (CLS) raised its annual revenue outlook to $10.85 billion and adjusted EPS to $5 per share, reflecting confidence in continued growth.
Negative Points
- The macro environment remains dynamic with trade policy uncertainties, posing potential risks to future performance.
- Enterprise end market revenue declined by 39% due to a technology transition in an AI, ML compute program with a hyperscaler customer.
- Despite strong demand, the company faces challenges in managing inventory levels, with a sequential increase in inventory balance.
- The ATS segment faces potential risks from macroeconomic slowdowns, which could impact future demand.
- Tariffs and trade restrictions remain a concern, although Celestica Inc (CLS) expects to recover most tariffs from customers.
