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On Thursday, TD Synnex (NYSE:SNX) shares faced a significant drop following the release of their first-quarter fiscal year 2025 results, which revealed a shortfall in both revenue and earnings per share (EPS). In response, Raymond (NSE:RYMD) James analyst Adam Tindle adjusted the price target for the company’s stock to $125 from the previous $150, while still maintaining a Strong Buy rating. With a market capitalization of $9.06 billion and trading at a P/E ratio of 13.4, InvestingPro analysis suggests the stock is currently undervalued relative to its Fair Value.
The reported revenue miss was attributed to a shift in product mix, impacting the gross versus net figures. However, Tindle highlighted that gross billings growth was robust, showing an 8% year-over-year increase, which neutralizes the mix effect. The EPS miss was largely due to non-operational factors, such as interest expenses, despite earnings before interest and taxes (EBIT) being slightly above expectations. The company maintains strong fundamentals with $58.5 billion in revenue over the last twelve months and a healthy EBITDA of $1.67 billion.
Tindle acknowledged the company’s challenges with cash flow, which saw a significant use of approximately $750 million due to inefficiencies in the hyperscaler assembly business. He compared this situation to similar issues experienced in the first quarter of fiscal year 2022 and expressed confidence that the stock would recover as cash flow improves. The current working capital build, he noted, comes with favorable terms, framing the issue as one of timing rather than fundamental weakness. InvestingPro data reveals several positive indicators, including management’s aggressive share buybacks and a strong dividend track record with 12 consecutive years of payments. For deeper insights into TD Synnex’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Looking ahead, Tindle suggested that TD Synnex might increase share repurchases, especially since the stock price is currently close to 10% above book value. Further insights are expected to be provided during the upcoming analyst day on April 10, where discussions on the sustainability of the company’s long-term profitable growth and other topics will take place. Analyst consensus remains bullish, with targets ranging from $136.91 to $165 per share, reflecting significant potential upside from current levels.
In other recent news, TD Synnex reported its Q2 2025 financial results, revealing a slight miss in both earnings per share (EPS) and revenue expectations. The company posted an EPS of $2.80, falling short of the $2.91 forecast, while revenue was reported at $14.53 billion, below the anticipated $14.79 billion. Despite the earnings miss, TD Synnex maintains an optimistic outlook, projecting EPS growth in the coming quarters with estimates of $3.00 for Q3 2025 and $3.19 for Q4 2025. Revenue forecasts also suggest an upward trend, with projections of $14.73 billion for Q3 2025 and $15.49 billion for Q4 2025. The company experienced a mixed performance across its segments, with strong results in distribution but challenges in the Hyve segment. Analysts have noted these challenges, particularly in the Hyve segment, which faced temporary setbacks due to component shipment delays. TD Synnex remains committed to overcoming these hurdles, focusing on strategic digital transformation initiatives. Despite these challenges, the company continues to expand its market presence, particularly in advanced and endpoint solutions.
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