On Wednesday, RBC (TSX:RY) Capital Markets increased their price target on Celestica (NYSE:CLS) stock, boosting it significantly to $115.00 from the previous $75.00, while retaining an Outperform rating on the company's shares. The revision comes as RBC Capital analysts anticipate a strong performance from Celestica in the year 2025.
The stock has demonstrated remarkable strength, delivering a 240.86% return over the past year and currently trading near its 52-week high of $101.72. InvestingPro data shows that 8 analysts have recently revised their earnings expectations upward for the upcoming period.
The analysts at RBC Capital are adjusting their financial forecasts for Celestica for fiscal years 2025 and 2026, expressing confidence in the company's potential to outperform consensus estimates. They argue that the upward valuation re-rating of Celestica's shares is likely to persist, contributing to another robust year for the stock. This optimism is supported by the company's strong revenue growth of 17.52% and its current market capitalization of $11.43 billion.
Celestica's current trading price reflects a next twelve months (NTM) price-to-earnings (P/E) ratio of 23 times, which is at the upper end of its historical range over the past decade, which spans from 5 to 23 times.
RBC Capital's analysts believe that the re-rating of Celestica's valuation is justified and will continue, particularly given the expected positive revisions to consensus estimates for 2025 and the company's growing proportion of High Precision Systems/Original Design Manufacturing (HPS/ODM). According to InvestingPro's comprehensive analysis, which includes over 30 financial metrics and key valuation indicators, Celestica appears to be trading near its Fair Value.
The analysts project that HPS/ODM will account for 33% of Celestica's revenue in fiscal year 2025, up from 29% in fiscal year 2024. This shift is seen as a factor that warrants a higher valuation multiple, especially when compared to peers such as Accton, which trades at a P/E ratio of 32 times NTM. For deeper insights into Celestica's valuation metrics and peer comparison analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, Celestica has been the subject of several significant developments. Stifel maintains a positive outlook on Celestica, raising its price target to $100 and retaining a Buy rating, driven by anticipated robust growth and a rebound in industrial markets. The firm projects earnings per share (EPS) for Celestica could fall within the $5.50 to $5.60 range.
UBS initiated coverage on Celestica with a Neutral rating and set a price target of $95.00, amidst expectations of strong investments in AI and a rebound in Advanced Technology Solutions. However, UBS suggests that the risk/reward profile is balanced at this point.
Moreover, BMO (TSX:BMO) Capital Markets and RBC Capital have raised their stock price targets to $72 and $75, respectively, following Celestica's strong third-quarter performance for 2024. The company also launched the DS4100 data center switch and expanded its senior secured credit agreement to $1.5 billion.
Lastly, Celestica has complied with the SEC requirements by submitting a recent report under the rules applicable to foreign private issuers. These are the recent developments in Celestica's operations and financial performance.
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