Well, I know its not about JBL, but since ECM discussions seem to have gravitated here, here is a CLS story:
Celestica stock surges on results, outlook
(Updates with midday stock prices, adds analyst comments in paragraph 16. In U.S. dollars
unless noted.)
OTTAWA, July 18 (Reuters) - Shares in Celestica Inc. (NYSE:CLS - News;
Toronto:CLS.TO - News) soared as much as 19 percent on Thursday morning after the
world's No. 4 contract electronics manufacturer posted second-quarter profits that inched above expectations and said it would
cut jobs to further improve profits.
At midday, the stock added C$4.35 to C$32.85 on the Toronto Stock
Exchange, a 15 percent gain, and $2.61 to $21.30 on Nasdaq amid positive
reports from several analysts.
Toronto-based Celestica posted adjusted earnings of 28 cents a share after
markets closed on Wednesday, 1 cent above the average Thomson First
Call estimate. Sales of $2.25 billion fell in line with company forecasts.
The company also said it will take several steps to boost profits: laying off
up to 6,000 staff to reduce excess manufacturing capacity, redeeming its
$130 million senior note balance to eliminate long-term debt, and buying
back up to 5 percent of its outstanding common shares.
"While, overall, we still remain concerned about tech during the next few
months, we think Celestica should be an outperformer," wrote Lehman
Brothers analyst Louis Miscioscia in a note that maintained a "strong buy"
rating and $32 stock target.
"With the shares trading below 15 times our conservative 2003 estimate ($1.35) we think building positions at these levels will be
rewarding to long-term investors."
Celestica's decision to use some of its $1.7 billion cash balance to buy back stock and redeem the $130 million in notes could add
between 5 cents and 10 cents per share to 2003 earnings, he added.
Celestica's key rivals are Solectron Corp. (NYSE:SLR - News), Flextronics International Ltd. (NasdaqNM:FLEX - News), and
Sanmina-SCI Corp. (NasdaqNM:SANM - News).
Prudential Financial analyst Ellen Chae reiterated a "buy" rating and raised her 2002 adjusted earnings estimate to $1.17 a share
from $1.15 and her 2003 target to $1.42 from $1.39.
"We are encouraged by Celestica's strong working capital and operational performance through the downturn and continue to
believe it is among the best-positioned," Chae wrote in a research note. "In addition, at current prices, we believe the stock is
undervalued."
Deutsche Bank maintained its "strong buy" and raised its 2002 earnings target to $1.12 a share from $1.05 and its 2003 estimate
to $1.35 a share from $1.30.
"Celestica trades at a steep discount to its peers despite its operational outperformance, industry-leading balance sheet and
favorable strategic position," wrote analyst Christ Whitmore.
Not everyone agrees with the rosy outlook.
UBS Warburg analyst Michael Urlocker cut his estimates based on a continued weak outlook for hardware sales.
Urlocker, who continues to rate the company a "hold", said the stock has been oversold amid fears Celestica's results would fall
short of estimates and a short-term relief rally should now occur.
"The stock is trading lower than we expected and is representing good value for patient long-term investors," he wrote.
"However, we would want to see evidence of a recovery in Celestica's end markets before we would justify an upgrade based
on fundamentals."
Urlocker cut his 2002 earnings estimate to $1.04 a share from $1.11 and reduced his revenue target to $8.97 billion from $9.3
billion. His 2003 earnings estimate was cut to $1.29 a share from $1.43 and revenues were dropped to $9.7 billion from $10.3
billion.
($1=$1.54 Canadian) |
