Flex stock warrants with Amazon signal long-term partnership

Investing.com - Flex Ltd. (NASDAQ:FLEX), a prominent player in the Electronic Equipment industry with a market capitalization of $18.69 billion, has entered into a five-year warrant agreement with Amazon.com Inc. (NASDAQ:AMZN), according to Raymond (NSE:RYMD) James analysis released Tuesday. InvestingPro data shows Flex has demonstrated strong momentum with a 29.64% return year-to-date.

The warrant agreement is structured with vesting tied to qualifying purchases from Amazon over the term, which Raymond James views as a positive indicator of the commercial relationship between the two companies. However, the firm notes it remains unclear what specific business areas are encompassed in this agreement. According to InvestingPro’s analysis, Flex maintains a "GOOD" overall financial health score, suggesting strong operational fundamentals.

Amazon frequently pursues similar arrangements with key suppliers, including a warrant agreement with Jabil Inc. (NYSE:JBL) earlier in 2025 and more recently with Fabrinet (NYSE:FN). Based on Raymond James’ research, this appears to be Amazon’s first such arrangement specifically with Flex.

While the agreement represents a roadmap for continued multi-year partnership, Raymond James believes it doesn’t necessarily signal meaningful incremental revenue opportunities in the near term. The firm suggests Amazon typically pursues these arrangements around existing business expected to be long-lived rather than new purchase commitments. With analysts setting a high target of $65 and maintaining a bullish consensus, InvestingPro subscribers can access detailed analysis and 12 additional ProTips about Flex’s growth potential.

Raymond James does not interpret this agreement as a negative for Jabil’s business with Amazon or Amazon Web Services (AWS), noting that Jabil maintains a "leading and expanding relationship" with AWS and that its recent $500 million capacity expansion is largely anchored by the high-growth AWS business.

In other recent news, Flex Ltd reported its first-quarter earnings for fiscal year 2026, delivering an adjusted earnings per share (EPS) of $0.72, which exceeded analyst expectations of $0.63. The company’s revenue also surpassed forecasts, reaching $6.6 billion compared to the anticipated $6.26 billion. Despite these strong earnings and revenue results, Flex’s stock experienced a decline in pre-market trading. Additionally, the company raised its revenue guidance for the year to $26.5 billion, up from the previous estimate of $25.9 billion.

KeyBanc Capital Markets maintained its Overweight rating on Flextronics stock, with a price target of $60.00, viewing the recent sell-off as a buying opportunity. The firm attributed the stock’s decline to investor concerns over the company’s maintained operating margin guidance of 6.0-6.1%, despite the improved revenue outlook. These developments highlight the mixed investor reactions to Flex’s financial performance and guidance adjustments.

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