Plexus stock price target cut to $162 at Needham

On Friday, Needham analysts adjusted their outlook on Plexus (NASDAQ:PLXS) shares, lowering the price target to $162 from the previous $172, while reaffirming a Buy rating on the stock. The revision follows Plexus’s announcement of its fiscal second quarter results, which landed at the midpoint of the provided guidance. With a market capitalization of $3.39 billion and trailing twelve-month revenue of $3.97 billion, the company’s non-GAAP (NG) earnings per share surpassed expectations, attributed to reductions in operating expenses, non-operating expenses, and a lower tax rate. InvestingPro data shows the company maintains strong financial health with a perfect Piotroski Score of 9.

Despite the current uncertain economic environment, Plexus reported positive indicators within its key business sectors. There is evidence of incremental improvements in the healthcare vertical, along with sustained robust performance in Aerospace & Defense (A&D) and semiconductor capital equipment (semi-cap). For the fiscal third quarter, Plexus has issued solid guidance, projecting revenues at the midpoint of their range to increase by 6% year-over-year, slightly above the Street’s forecast of a 5% rise. The guidance for earnings per share aligns with the consensus.

The company is optimistic about the coming months, anticipating continued sequential revenue growth into the fiscal fourth quarter. It is also expected to conclude fiscal year 2025 with non-GAAP operating margins of 6% or higher. InvestingPro analysis reveals several additional strengths, including a strong free cash flow yield and low P/E relative to growth potential. Subscribers can access 8 more exclusive ProTips and a comprehensive Pro Research Report for deeper insights. Plexus’s diversified manufacturing operations and strong customer relationships across various market segments are seen as key factors that provide stability amidst broader macroeconomic uncertainty.

In response to the recent performance and forward guidance, Needham has increased its revenue and EPS estimates for Plexus for fiscal year 2025. The firm’s maintained Buy rating reflects confidence in Plexus’s ability to navigate through the challenging macro landscape while capitalizing on its strengths in diversified industries.

In other recent news, Plexus Corporation reported its Q2 FY2025 earnings, exceeding analyst expectations for earnings per share (EPS) with a result of $1.66, compared to the forecasted $1.54. Despite this positive earnings surprise, the company slightly missed revenue forecasts, reporting $980.17 million against an expected $981.4 million. The company has projected Q3 revenue between $1,000 and $1,040 million, with EPS guidance set at $1.65 to $1.80. Plexus anticipates meaningful EPS growth for FY2025, driven by strategic investments and operational improvements, as highlighted by CEO Todd Kelsey.

The company has made significant strategic investments in AI and automation, contributing to its strong performance in the aerospace and healthcare sectors, with sequential revenue increases of 8% and 10%, respectively. However, the industrial segment experienced a 10% decline, impacting overall revenue. Plexus continues to focus on innovation and operational efficiency, which are yielding positive results. Additionally, the company’s substantial liquidity and robust free cash flow generation provide opportunities for further shareholder value creation.

Analyst firms have not provided recent upgrades or downgrades, but the company remains focused on navigating market complexities, including potential supply chain disruptions and tariff uncertainties. Plexus is also planning to open a new facility in Penang, Malaysia, within the next few quarters to support its growth initiatives.

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