Celestica Initiated with Neutral Rating by Citi

Citi analyst Atif Malik initiated coverage of Celestica with a Neutral rating and $172 price target, citing the company's market share gains in the data center switch market but noting that shares are fully valued after a 70% year-to-date rally. The analyst believes Celestica trades at a premium valuation.

Citi analyst Atif Malik has initiated coverage of Celestica Inc (CLS) with a Neutral rating and set a price target of $172. Malik highlights that while Celestica is enhancing its market position in the expanding data center switch sector, its shares appear to be fully valued following a 70% surge this year. The analyst believes that Celestica trades at a premium valuation, reflecting positive developments.

Analysts' Forecasts
Based on the one-year price targets from 14 analysts, the average target price for Celestica is $135.51, with a high estimate of $180.00 and a low estimate of $101.00. This implies a potential downside of 15.37% from the current price of $160.12 [1].

The consensus recommendation from 16 brokerage firms is currently 1.9, indicating an "Outperform" status. GuruFocus estimates suggest that the fair value (GF Value) for Celestica in one year is $41.98, implying a downside of 73.78% from the current price [1].

Business Developments
Celestica reported strong Q1 2025 performance, with revenues of $2.65 billion and adjusted EPS of $1.20, both exceeding guidance. The company's adjusted operating margin reached a record high of 7.1%, driven by strong demand in both CCS and ATS segments [1].

The CCS segment revenue increased by 28%, fueled by high demand for networking switches, particularly from hyperscaler customers. The ATS segment revenue grew by 5%, surpassing expectations due to significant growth in the capital equipment business [1].

Celestica raised its annual revenue outlook to $10.85 billion and adjusted EPS to $5 per share, reflecting confidence in continued growth. However, the macro environment remains dynamic with trade policy uncertainties, posing potential risks to future performance [1].

Valuation
Celestica's stock has been one of the most searched-for stocks on Zacks.com lately, returning +18.4% over the past month versus the Zacks S&P 500 composite's +5.4% change. The company is graded C on the Zacks Value Style Score, indicating that it is trading at par with its peers [2].

Conclusion
While Celestica's market share gains and strong Q1 2025 performance are positive, the analyst's Neutral rating and the stock's premium valuation suggest caution. Investors should consider the company's market position and current valuations in their decisions.

References
[1] https://www.gurufocus.com/news/2989134/celestica-cls-rated-neutral-by-citi-analyst-amid-market-share-gains-cls-stock-news
[2] https://finance.yahoo.com/news/celestica-inc-cls-trending-stock-130003550.html