RBC raises Celestica stock target to $160 on strong outlook

On Wednesday, RBC Capital Markets adjusted its stance on Celestica (NYSE:CLS), increasing the company’s price target from $140.00 to $160.00, while reiterating an Outperform rating. The decision follows a recent investor lunch in Toronto with Celestica’s CFO Mandeep Chawla, which confirmed RBC Capital’s positive view of the company’s business trajectory. The optimism appears well-founded, as InvestingPro data shows the stock has delivered an impressive 257% return over the past year, with a notable 31% surge in the past week alone.

During the event, RBC Capital analysts highlighted Celestica’s continued momentum in launching new programs and its distinctive product offerings for hyperscaler clients. The firm’s analysts believe that these factors, combined with the potential for earnings to surpass consensus estimates, expanding profit margins, and a growing proportion of higher-quality revenue streams, like HPS/ODM, justify a higher valuation for Celestica stock. This outlook is supported by the company’s strong 21% revenue growth and "GREAT" financial health score according to InvestingPro analysis.

The analysts at RBC Capital emphasized that the investor meeting with CFO Chawla reinforced their thesis regarding Celestica’s performance. The company’s strong positioning with hyperscalers is seen as a key differentiator that will likely contribute to its financial success. The analysts expect that as Celestica continues to deliver on these fronts, its shares will experience an upward re-rating in the market.

The new price target of $160.00, up from the previous target of $140.00, reflects RBC Capital’s confidence in Celestica’s ability to maintain its growth trajectory and capitalize on its strategic initiatives. The firm’s analysts maintain that the company’s focus on high-potential sectors and operational excellence will lead to a continued positive outlook.

In summary, RBC Capital’s updated price target for Celestica is based on a combination of factors, including the company’s strong program momentum, product differentiation, and potential for higher-than-expected earnings. The firm’s analysts underscore their belief that these elements will drive a continued upward re-rating of Celestica’s shares in the marketplace. For deeper insights, InvestingPro subscribers can access 18 additional ProTips and a comprehensive Research Report that provides detailed analysis of Celestica’s valuation and growth prospects.

In other recent news, Celestica has been the focus of several analyst upgrades. RBC Capital Markets raised its price target for Celestica from $115.00 to $140.00, maintaining an Outperform rating. This adjustment follows Celestica’s strong financial performance and the acquisition of two significant new programs expected to drive growth through 2026 and 2027. Similarly, BMO Capital Markets revised its price target for Celestica to $140, up from $72, due to the company’s growing capabilities in the artificial intelligence sector and potential for increased capital expenditures.

Stifel also maintained a positive outlook on Celestica, raising its price target to $100 from the previous $70 while retaining a Buy rating. This was based on expectations of continued strong performance in the cloud sector and an upswing in industrial revenue. Furthermore, Celestica has announced the resignation of Laurette T. Koellner from its Board of Directors, effective January 31, 2025, for personal reasons. The company is now in the process of finding a suitable replacement. These are some of the recent developments affecting Celestica.

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