Thursday July 11, 2:35 pm Eastern Time
Reuters Company News
Contract manufacturer shares soar on Goldman note
LOS ANGELES, July 11 (Reuters) - Shares in top electronics manufacturers soared on Thursday after brokerage Goldman Sachs initiated coverage on the industry with positive comments about its long-term potential.
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Shares in Flextronics International Ltd. (NasdaqNM:FLEX - News) were up 17.2 percent at $8.23, shares in Celestica Inc. (NYSE:CLS - News) were up 16.5 percent at $19.10, shares in Jabil Circuit Inc. (NYSE:JBL - News) were up 9 percent at $19.19, shares in Sanmina-SCI Corp. (NasdaqNM:SANM - News) were up 3.5 percent at $5.63 and shares in Solectron Corp. (NYSE:SLR - News) were up 3.5 percent at $5.36.
Goldman Sachs analyst Stephen Savas started Jabil at a "Market Performer" rating and started Flextronics, Celestica, Sanmina-SCI and Solectron at "Market Outperformer" ratings.
Savas said Jabil was his favorite stock of the group but said "unfortunately these good qualities are not unnoticed, and we believe valuation leaves little room for attractive upside over (the next) 12 (months)."
As for the other four of the top-five manufacturers, Savas said "We like (the manufacturers) for their long-term prospects and believe investors currently holding shares or buying at these levels have a good (long-term) upside opportunity."
The $100-billion-a-year electronics manufacturing services (EMS) sector derives most of its business from high-volume, low-margin production of things like cell phones, data and networking products, and video game systems, primarily in low-cost manufacturing centers like Asia and Eastern Europe.
Shares in those companies have been hard-hit of late, as investors worry about a slower-than-expected recovery in the telecoms industry and weak sales for PCs, as well as general economic conditions. |
