In a recent analysis, Morgan Stanley's Erik Woodring has adjusted his stance on Ingram Micro (INGM, Financial), lowering the rating from Overweight to Equal Weight. The updated price target is now $22, a slight decrease from the previous $23. Although the firm maintains a favorable outlook on IT spending, it now sees greater potential in TD Synnex compared to Ingram Micro and has shifted its preference accordingly.
The analyst also highlighted some concerns regarding Ingram Micro's earnings projections for 2026, indicating possible downside risks. Additionally, the ongoing influence of private equity is expected to continue hindering the company's valuation expansion. Morgan Stanley notes that TD Synnex appears to have an advantage over Ingram Micro in critical areas such as growth, cash flow conversion, and profit margins.
INGM Key Business Developments
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ingram Micro Holding Corp (INGM, Financial) reported a net revenue of $12.3 billion, up 11% year over year on an FX neutral basis, exceeding the high end of their guidance.
- The company's gross profit of $829 million was more than 2% above the midpoint of their guidance.
- Ingram Micro Holding Corp (INGM) saw double-digit net sales growth in North America and Asia Pacific regions.
- The company's cloud business, although only 1% of net sales, contributed nearly 15% of total gross profit in the first quarter.
- Ingram Micro Holding Corp (INGM) has invested over $600 million in their cloud and digital platform capabilities, positioning them for future growth and competitive differentiation.
Negative Points
- The macroeconomic and trade environments present volatility, making the second quarter and back half of 2025 harder to forecast.
- Gross margins were down 62 basis points year over year due to mixed factors and market conditions in India.
- The company experienced an adjusted free cash flow outflow of $159 million in the first quarter, aligning with seasonal expectations.
- Ingram Micro Holding Corp (INGM) faces challenges in the SMB sales category, which remains more muted due to macro uncertainties.
- The company anticipates potential impacts from tariffs and macroeconomic conditions, which are reflected in their cautious Q2 guidance.
