Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.

Celestica Inc T.CLS

Alternate Symbol(s):  CLS

Celestica Inc. is engaged in designing, manufacturing and providing hardware platform and supply chain solutions. It delivers supply chain solutions globally to customers in two operating segments: Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS). The ATS segment consists of its ATS end market and is comprised of its Aerospace & Defense (A&D), Industrial, HealthTech, and Capital Equipment businesses. Its Capital Equipment business is comprised of its semiconductor, display, and robotics equipment businesses. The CCS segment consists of its communications and enterprise end markets. The enterprise end market is comprised of Celestica’s servers and storage businesses. It offers a range of product manufacturing and related supply chain services to customers in both of its segments, including design and development, new product introduction, engineering services, component sourcing, electronics manufacturing and assembly, testing, and systems integration.


TSX:CLS - Post by User

Post by retiredcfon Jul 18, 2024 1:19pm
170 Views
Post# 36138669

TD

TD

Q2/24 PREVIEW: EXPECTING A COMMUNICATIONS RAMP

THE TD COWEN INSIGHT

With Enterprise growth expected to normalize in H2, we believe investor focus will be on the pace of acceleration in Communications revenue, driven by hyperscaler demand for Celestica's ODM networking equipment. An earlier-than-expected ramp in networking could also support upside to 2024 guidance. We will revisit our estimates, target price, and recommendation after results are released.

Event:

Q2/24 Results: Wednesday, July 24, 2024, after markets close. Conference Call: Thursday, July 25, 2024, at 8:00 a.m. ET. Link Impact: NEUTRAL

We forecast total revenue of $2.2bln, up 15% y/y. We estimate Advanced Technology Solutions (ATS) revenue of $787mm, down 9% y/y; Communications revenue of $818mm, up 45% y/y; and Enterprise revenue of $628mm, up 23% y/y. We forecast EBIAT of $137mm, or 6.1% EBIAT margin, up ~60bps y/y. We also expect EPS of $0.80.

AI networking acceleration could offset normalizing Enterprise growth. We believe Celestica's Communications business is well-positioned to benefit from ramping demand
for networking equipment in support of GenAI data centres, given its technology is aligned with hyperscaler architecture needs and its existing leadership in next-generation ethernet switches. HPS growth was a solid ~40% y/y in Q1 and is expected to continue through the year. Recent discussions across data centre OEMs and networking silicon leaders support our thesis that ethernet-based networking could see significant growth over the next several years in support of GenAI network build-outs, with Celestica expected to continue to play a critical role as a leading ODM/white-box provider across all top 5 global hyperscalers.

ATS end markets remain volatile in the near term. We expect continued demand strength in A&D, supported by growth in defense and commercial aerospace. Softness in Industrial is expected to persist, particularly in demand for EV charging, although growth is expected to return by Q4/24. Capital Equipment is expected to return to growth in 2024 after a decline in 2023, supported by new program ramps and improving momentum in the base portfolio. Industry stakeholders continue to expect the semiconductor market to recover throughout the year, driven by improving electronic equipment sales, stabilizing inventories, and an increase in wafer fab capacity. Longer term, the ATS segment continues to be a large opportunity, in our view, given lower outsourced manufacturing penetration in markets that require a high level of engineering expertise.


<< Previous
Bullboard Posts
Next >>