Celestica earns another price target raise at RBC

It had a terrific 2024 and RBC analyst Paul Treiber thinks there is still money to be made on Celestica (Celestica Stock Quote, Chart, News, Analysts, Financials NYSE:CLS).

As reported by The Globe and Mail, the analyst January 8 maintained his “Outperform” rating on CLS while raising his price target on the stock from $75.00 to $115.00.

“Celestica tends to provide conservative guidance; last year Celestica raised FY24 guidance 3 times,” Treiber wrote. “For FY25, we believe Celestica is likely to exceed consensus and increase guidance through the year, given: 1) rising hyperscaler capex; 2) likely strong 800G switch upgrades; and 3) expected resurgence of revenue at Celestica’s largest customer 2H/FY25. We are raising our FY25 estimates to US$10.71-billion revenue and US$4.55 adj. EPS, up from $10.41-billion and $4.42 previously and above consensus at $10.56-billlion and $4.46.”

While the analyst says CLS is not necessarily a cheap stock anymore, there is still room for growth.

“Celestica is trading at 23 times NTM [next 12-month] P/E, which is at the high-end of its 10-year historical range (5-23 times),” he noted. “We believe Celestica’s valuation re-rating will continue, given the likelihood of upside to consensus estimates in 2025 and Celestica’s increasing mix of HPS/ODM (estimate 33 per cent of revenue in FY25, up from 29 per cent in FY24), which we believe warrants a higher valuation multiple (ODM peer Accton trades at 32 times NTM P/E). Our $115.00 price target reflects our revised estimates and is based on 21 times CY26e P/E (prior 17 times CY25e P/E).”