KeyBanc has increased its price target for Flex (FLEX, Financial) from $44 to $50, maintaining an Overweight rating on the stock. The firm credits Flex's "grid-to-chip" strategy for establishing a unique position in the data center sector, contrasting with competitors. This strategy includes robust cloud computing capabilities, which the company is expanding through vertical integration and its proprietary IP for power products.
KeyBanc anticipates that Flex will continue to enhance its Data Center business, pursuing both organic growth and acquisitions, and realign its portfolio towards sectors offering higher growth and margins. While determining the appropriate valuation multiple for Flex is challenging, the firm remains hopeful that the company's data center focus will attract investor attention. Additionally, KeyBanc expresses confidence in Flex's management team to further transform the business and enhance shareholder value.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Flex Ltd (FLEX, Financial) is $47.75 with a high estimate of $50.00 and a low estimate of $43.23. The average target implies an upside of 12.66% from the current price of $42.38. More detailed estimate data can be found on the Flex Ltd (FLEX) Forecast page.
Based on the consensus recommendation from 11 brokerage firms, Flex Ltd's (FLEX, Financial) average brokerage recommendation is currently 1.8, 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 Flex Ltd (FLEX, Financial) in one year is $22.05, suggesting a downside of 47.97% from the current price of $42.38. 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 Flex Ltd (FLEX) Summary page.
FLEX Key Business Developments
Release Date: May 07, 2025
- Q4 Revenue: $6.4 billion, up nearly 4% year-over-year.
- Q4 Adjusted Operating Margin: 6.2%, a quarterly record.
- Q4 Adjusted EPS: $0.73, up 28% year-over-year.
- Full Year Revenue FY25: $25.8 billion, down 2% year-over-year.
- Full Year Adjusted Operating Margin FY25: 5.7%, a record level.
- Full Year Adjusted EPS FY25: $2.65, up 23% year-over-year.
- Free Cash Flow FY25: Over $1 billion, a record high.
- Data Center Revenue FY25: Approximately $4.8 billion, up about 50% year-over-year.
- Q4 Gross Margin: 9.4%, up 80 basis points year-over-year.
- Q4 Operating Profit: $396 million.
- Q4 Reliability Segment Revenue: $2.9 billion, down 1.3% year-over-year.
- Q4 Agility Segment Revenue: $3.5 billion, up 8.2% year-over-year.
- Full Year CapEx FY25: $423 million, approximately 1.6% of revenue.
- FY26 Revenue Guidance: $25 billion to $26.8 billion.
- FY26 Adjusted Operating Margin Guidance: 6% to 6.1%.
- FY26 Adjusted EPS Guidance: $2.81 to $3.01 per share.
- Q1 FY26 Revenue Guidance: $6 billion to $6.5 billion.
- Q1 FY26 Adjusted EPS Guidance: $0.58 to $0.66 per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Flex Ltd (FLEX, Financial) reported a strong finish to the fiscal year with Q4 revenue of $6.4 billion, marking a 4% year-over-year growth.
- The company achieved a record annual adjusted operating margin of 5.7% despite macroeconomic challenges.
- Flex Ltd (FLEX) generated over $1 billion in free cash flow, exceeding their 80%-plus adjusted free cash flow conversion target for the second consecutive year.
- The data center business saw significant growth, with revenue increasing by about 50% year-over-year, reaching approximately $4.8 billion.
- Flex Ltd (FLEX) executed multiple program ramps, completed key acquisitions, and won two PACE awards in the automotive space, showcasing their operational efficiency and strategic direction.
Negative Points
- The company faces continued macroeconomic headwinds, particularly affecting core industrial, renewables, and medical equipment markets.
- Tariffs remain a concern, adding costs that Flex Ltd (FLEX) plans to pass through, potentially impacting cash flow timing.
- There is a potential slowdown in the broader economy, which could affect demand and pose risks to the company's performance.
- The automotive segment is expected to experience weakness due to tariff-related disruptions affecting customer volumes.
- Flex Ltd (FLEX) anticipates a sequential revenue decline in Q1 FY26, with lower fixed cost absorption and margin drag in the automotive business.
