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.
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. |
