Celestica is the IBD Stock Of The Day as the stock rockets after the Canadian company's beat-and-raise third-quarter earnings report.
The Toronto-based electronics contract manufacturer late Wednesday said adjusted earnings rose 60% year over year to $1.04 a share. Sales climbed 22% to $2.5 billion. Analysts polled by FactSet had expected earnings of 93 cents a share on sales of $2.41 billion.
For the current quarter, Celestica expects to earn $1.04 a share, up 37%, on sales of $2.5 billion, up 17%. That's based on the midpoint of its outlook. Wall Street was predicting earnings of 95 cents a share on sales of $2.45 billion for the fourth quarter.
Celestica also provided its outlook for next year. For 2025, it forecast adjusted earnings of $4.42 a share, up 15% from its target of $3.85 for this year. It sees revenue climbing 8% to $10.4 billion from its 2024 target of $9.6 billion.
In afternoon trading on the stock market today, Celestica stock jumped nearly 16% to 66.30.
With the move, Celestica stock gapped out of a consolidation pattern at a buy point of 63.49, according to IBD MarketSurge charts. Celestica had tested that buy point for three trading sessions starting Oct. 11 but closed each of those days below the buy point.
AI, Cloud Computing Driving Celestica Sales
Celestica is an electronics contract manufacturer serving information technology, communications, aerospace and defense, health tech and other industries.
On a conference call with analysts, Chief Executive Rob Mionis said the company's third-quarter outperformance was driven by "continued strong demand" in the company's Connectivity and Cloud Solutions group.
The company also announced a new business relationship with artificial intelligence services firm Groq. Celestica is supporting Groq in the manufacturing of servers for AI and machine learning as well as full rack solutions.
Groq has developed a proprietary silicon platform known as the Language Processing Unit, which specializes in accelerated inferencing.
Celestica Stock Gets Price-Target Hikes
At least three Wall Street analysts raised their price targets on shares after the company's earnings report.
RBC Capital Markets analyst Paul Treiber reiterated his outperform rating on Celestica stock and upped his price target to 75 from 65.
"Celestica is seeing increasing traction at hyperscalers and a mix shift to higher-margin programs," Treiber said in a client note.
BMO Capital Markets analyst Thanos Moschopoulos maintained his outperform rating on Celestica stock and increased his price target to 72 from 64.
"We believe the AI capex cycle, and Celestica's market position, will be more durable than the stock's current valuation implies — and see further upside to the stock, particularly given Celestica's consistent margin execution," Moschopoulos said in a report.
Celestica is on two IBD stock lists: IBD 50 and Tech Leaders.
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