Celestica has way more upside, Citi says

Citi analyst Atif Malik raised his target on Celestica (Celestica Stock Quote, Chart, News, Analysts, Financials NYSE:CLS) to US$436.00 from US$415.00, citing stronger-than-expected third-quarter results and accelerating demand for artificial intelligence infrastructure.

As reported by the Globe and Mail, Malik maintained his “Buy” rating on the Toronto-based company, raising his earnings forecasts following a substantial increase in Celestica’s 2027 revenue outlook.

“Strengthening demand and operating leverage delivered upside to CLS Sep-Q results and positive revisions to FY26 guidance,” Malik said in his Oct. 28 analysis.

Celestica reported third-quarter revenue of US$5.83-billion, up 83% from US$3.19-billion a year earlier, while adjusted earnings per share more than doubled to US$3.30 from US$1.58. Its adjusted operating margin increased to 8.5% from 7.6%, reflecting improved profitability as revenue expanded. Celestica also raised its fiscal 2026 outlook, forecasting revenue of US$21-billion and adjusted EPS of US$11.55, representing year-over-year increases of 69% and 91%, respectively.

However, Malik highlighted the company’s substantially higher expectations for 2027 as the most significant development.

“As AI continues to drive accelerating levels of infrastructure investment, the company meaningfully raised its FY27 sales outlook from more than $34-billion/more than 65% year-over-year to $40-billion/up 90% year-over-year,” the analyst added.

Celestica now expects fiscal 2027 revenue of US$40-billion, adjusted EPS of US$21.50 and an adjusted operating margin of 9%, compared with approximately 8.4% expected for 2026.

“Higher topline growth and leverage are resulting in improved profitability with FY27 OpMgn expected to reach 9.0%, up 60 basis points year-over-year,” Malik said. He increased his fiscal 2026 earnings-per-share estimate by 2% and his 2027 estimate by 9%.

Celestica CEO Rob Mionis argued that the company continues to benefit from strong demand among major cloud computing providers and developers of advanced AI models.

“Celestica is well-positioned to continue to support leading hyperscalers and frontier AI labs through the ongoing AI infrastructure supercycle,” Mionis said. “The demand environment continues to be very robust, supporting our 2027 revenue outlook, with customer demand forecasts meaningfully higher for 2028.”

Mionis said the company’s record third-quarter adjusted operating margin demonstrates its ability to translate higher sales into improved profitability.

Malik’s revised target reflects the stronger growth outlook and expectations for continued margin expansion as investment in AI infrastructure accelerates.

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