Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 10 Apr, 26 | CLS | Buy | USD 328.33 | USD 345.0 | USD 370.0 | 3 days | Closed |
11.05%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Celestica Inc., together with its subsidiaries, provides supply chain solutions in Asia, North America, and internationally. It operates through two segments, Advanced Technology Solutions, and Connectivity and Cloud Solutions. The company offers a range of product manufacturing and related supply chain services, including design and development, new product introduction, engineering services, component sourcing, electronics manufacturing and assembly, testing, mechanical assembly, systems integration, precision machining, logistics, asset management, product licensing, and after-market repair and return services. It also provides hardware platform solutions, which includes development of infrastructure platforms, and hardware and software design solutions and services, including open-source software that can be used as-is or customized for specific applications; and management of program, including design and supply chain, manufacturing, and after-market support, including IT asset disposition and asset management services. The company offers its products and services to original equipment manufacturers, and cloud-based and other service providers, including hyperscalers, and other companies in aerospace and defense, industrial, HealthTech, capital equipment, communications, and enterprise markets. The company has a strategic collaboration with Advanced Micro Devices, Inc. for the development of Helios, a rack-scale AI platform. The company was incorporated in 1994 and is headquartered in Toronto, Canada.
Strong Free Cash Flow Generation: Free cash flow increased to USD 458.3 million in FY25 from USD 306 million in FY24
Significant EPS Expansion: GAAP EPS rose sharply to USD 7.16 in FY25 from USD 3.61 in FY24
Rising Capital Intensity: Capital expenditure increased to USD 201 million in FY25 from USD 171 million in FY24
Weakness in ATS Segment Growth: ATS segment revenue declined to USD 795 million in Q4 FY25 compared with USD 803 million in Q4 FY24
High dependence on hyperscaler demand, coupled with customer concentration and rising capital intensity, exposes the company to demand cyclicality, margin volatility, and execution risks in scaling AI-driven infrastructure
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 328.33 | 290.0 | 345.0 | 370.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Robust Revenue Expansion Driven by AI and Data Center Demand: Celestica reported strong top-line growth in FY25, with revenue reaching FY25 USD 12.4 billion compared with FY24 USD 9.65 billion, reflecting a 28% year-over-year increase. This growth was primarily supported by rising demand for AI-driven data center infrastructure and cloud-related technologies, particularly within the Connectivity & Cloud Solutions segment.
Significant Earnings Growth Reflecting Operating Leverage: The company demonstrated substantial improvement in profitability, with GAAP EPS rising to FY25 USD 7.16 from FY24 USD 3.61, while adjusted EPS increased to FY25 USD 6.05 compared with FY24 USD 3.88. The sharp earnings expansion highlights improved operating leverage and favorable business mix driven by higher-margin programs.
Margin Expansion Supported by Improved Business Mix: Operating efficiency improved during FY25, with GAAP operating margin reaching 8.4% and adjusted operating margin improving to 7.5%, reflecting expansion of 220 basis points and 100 basis points, respectively, on a year-over-year basis. This was driven by stronger performance in high-growth segments and enhanced cost discipline.
Segment Performance Led by Connectivity & Cloud Solutions: The Connectivity & Cloud Solutions segment emerged as the key growth driver, supported by strong hyperscaler demand and rapid scaling of AI and networking programs. In contrast, the Advanced Technology Solutions segment remained relatively stable, reflecting selective portfolio optimization and strategic pruning of lower-margin businesses.
Operational Efficiency and Working Capital Improvements: The company improved its operational efficiency through better working capital management, with inventory levels declining and cash cycle days improving to 61 days in Q4 FY25 compared with 69 days in Q4 FY24. Inventory turns also increased, reflecting enhanced supply chain efficiency and demand alignment.
Strong Cash Flow Generation and Capital Allocation: Celestica generated robust operating cash flow of FY25 USD 659.5 million and free cash flow of USD 458.3 million, enabling continued investments in growth initiatives. The company also returned capital to shareholders through share repurchases totaling USD 151 million during FY25, highlighting disciplined capital allocation.
Strategic Investments to Support Long-Term Growth: The company announced a significant increase in capital expenditure plans, targeting approximately USD 1 billion in FY26 to expand manufacturing capacity and support AI infrastructure demand. Investments across the U.S., Thailand, and other regions are expected to enhance scalability and align with hyperscaler demand over the medium term.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to Celestica, Inc (NYSE: CLS) at the closing market price of USD 328.33, as on April 09, 2026
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Electronic Components
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CLS Celestica Inc. |
-7.82 2.06% | 372.55 | 55.90 | 44.64 | 3.74 | 20.91 | 3.75 | 38.33 |
| APH Amphenol Corporation |
2.85 1.77% | 163.96 | 45.49 | 34.25 | 8.09 | 13.93 | 8.26 | 27.70 |
| GLW Corning Incorporated |
19.52 11.13% | 194.92 | 89.92 | 53.19 | 9.09 | 12.03 | 9.59 | 40.14 |
| HNHPF Hon Hai Precision Industry Co Ltd ADR |
- -% | 17.41 | 10.86 | 8.47 | 0.0073 | 0.92 | 0.0057 | 0.11 |
| TEL TE Connectivity Ltd |
5.44 2.56% | 217.64 | 23.48 | 18.83 | 2.68 | 3.73 | 2.85 | 14.55 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on April 10, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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