Goldman Sachs initiates Celestica stock with Buy rating, $340 price target

Investing.com - Goldman Sachs initiated coverage on Celestica (NYSE:CLS) with a Buy rating and a $340.00 price target on Thursday. The stock, currently trading near its 52-week high of $271.70, has demonstrated remarkable momentum with a 192.48% year-to-date return.

The investment bank views Celestica as a beneficiary of growing AI data center deployments, citing the company’s competitive advantages in engineering and ability to scale production quickly and reliably compared to other ODM and EMS players. According to InvestingPro analysis, the company maintains a GREAT financial health score, with particularly strong momentum metrics.

Goldman Sachs believes Celestica’s more than 150% year-to-date stock return in 2025 is justified as its valuation converges toward other hyperscale-exposed networking vendors, noting over 40% growth in next-twelve-month EPS estimates and approximately 18X P/E multiple expansion. The company currently trades at a P/E ratio of 58.5x, reflecting investor optimism about its growth prospects. Get deeper insights into Celestica’s valuation metrics and 15+ additional ProTips with InvestingPro.

The firm projects Celestica’s revenue will grow from $9.6 billion in 2024 to $21.4 billion in 2029, representing a 17% five-year compound annual growth rate, with EPS growth outpacing at 25% CAGR during the same period.

Goldman Sachs values Celestica at 40X NTM+1 EPS, a premium to the average of its peers across AI-exposed data center equipment providers (approximately 18X) but at a discount to Arista Networks (approximately 44X).

In other recent news, Celestica has caught the attention of several analyst firms and made notable corporate announcements. RBC Capital raised its price target for Celestica to $225, citing strong second-quarter results driven by increased demand from hyperscalers. Meanwhile, BMO Capital also increased its price target to $300, influenced by Celestica’s strategic partnership with Broadcom, which is expected to benefit from OpenAI collaborations. In addition, Aletheia Capital initiated coverage of Celestica with a Buy rating and a $350 price target, highlighting its role as a key manufacturing partner for Google and future plans involving OpenAI.

Celestica has also introduced two new 1.6TbE data center switches, the DS6000 and DS6001, designed for AI and machine learning applications, doubling the capacity of its existing solutions. The switches are based on Broadcom’s Tomahawk 6 chipset and offer up to 102.4Tbps of switching capacity. Additionally, Celestica expanded its Board of Directors by appointing Chris Colpitts, who brings two decades of experience in technology, media, and telecommunications. These developments underscore Celestica’s strategic initiatives and ongoing growth in the technology sector.

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