On Thursday, Stifel, a financial services company, adjusted its price target for Plexus Corp (NASDAQ:PLXS), a leading electronics manufacturing services provider. The new price target is set at $114, up from the previous $95, while the Hold rating on the stock remains unchanged.
The revision follows Plexus's third-quarter results, which showcased a substantial outperformance on the bottom line. Despite revenues of $960.8 million falling short of expectations and hitting the lower end of the guidance range, the gross margin of 9.8% exceeded forecasts, attributed to favorable product mix and effective execution.
Plexus's management highlighted a resurgence in orders within certain sectors such as semiconductor capital equipment, test and measurement, and broadband. Additionally, steady demand in the aerospace sector is evident. The company has set a target for 9-12% top-line growth by the fiscal year 2025, with a non-GAAP operating margin goal of 6% or higher.
Stifel acknowledges Plexus's proficient handling of the challenging conditions over the past quarters and anticipates the company to experience accelerated growth as it approaches FY25. However, the firm notes that Plexus's shares are currently trading at 19.9 times Stifel's calendar year 2025 earnings per share estimate of $6.54, which represents a significant premium compared to its peers in the electronic manufacturing services (EMS) industry. This valuation has been a factor in Stifel's decision to maintain the Hold rating despite the increased price target.
In other recent news, Plexus Corp. reported substantial earnings in its fiscal second quarter, with $255 million in new program wins. These successes are projected to contribute to a 9% to 12% revenue compound annual growth rate in the coming years. The company also generated $65 million in free cash flow during this period. Plexus Corp. has set its revenue growth target for the fiscal fourth quarter of 2024 at 3%, aligning with median analyst projections. The company's non-GAAP EPS forecast for the next quarter is significantly above both consensus and previous estimates.
Needham and Benchmark have shown confidence in Plexus Corp.'s financial trajectory, raising their price targets to $144 and $120, respectively, while maintaining a 'Buy' rating. These adjustments followed Plexus's robust fiscal third-quarter performance and a site visit by Benchmark.
In addition to these financial developments, Plexus Corp. is committed to sustainability, with an annual report due for release soon. Despite muted outlooks in some sectors, the company has witnessed strong performance in the Healthcare/Life Sciences sector and robust demand in the Americas. These are among the recent highlights for Plexus Corp., as reported in past articles.
InvestingPro Insights
As Plexus Corp (NASDAQ:PLXS) navigates through its growth strategy towards the fiscal year 2025, real-time data from InvestingPro offers additional context to their financial landscape. With a market capitalization of $3.55 billion and a current P/E ratio of 32.12, Plexus is trading at a premium compared to some industry peers. This aligns with Stifel's observation of the stock's valuation. Furthermore, the company's stock is trading near its 52-week high, at 97.83% of this peak value, which may suggest investor confidence in its growth trajectory.
InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, indicating potential optimism in Plexus's financial performance. Additionally, the company has been profitable over the last twelve months and is predicted to remain profitable this year. Despite a slight decline in revenue growth over the last quarter, Plexus has demonstrated a strong return over the last month with a 12.67% increase and an impressive 17.22% over the last three months. These metrics underscore the company's robust short-term performance, which may be of interest to investors looking for momentum in the EMS sector.
For investors seeking further insights, InvestingPro offers a suite of additional tips on Plexus, which can be accessed through their platform. Utilize coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing a deeper dive into the company's financial health and future prospects. There are 11 more InvestingPro Tips available for Plexus, offering a comprehensive analysis for informed investment decisions.
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