Celestica (CLS) Stock Forecast & Price Target

Celestica Inc. has demonstrated robust growth in its hyperscaler business, which surged by 66% year-over-year to $4.8 billion, accounting for 50% of its total revenue in FY24. Revenue estimates for the upcoming fiscal years have been revised upward, projecting revenues of $11.6 billion in FY25, $13.3 billion in FY26, and $15.8 billion in FY27, alongside an increased contribution from hyperscaler revenue expected to rise to 57% of total revenue in FY25. Additionally, the company has shown a significant compound annual growth rate (CAGR) of 54% in hyperscaler revenue over the last five years, indicating a strong and growing demand for its offerings, particularly in networking switches, which grew by 82% year-over-year in Q2.

Celestica Inc. has reported a significant decline in revenue from its Connectivity & Cloud Solutions (CCS) Enterprise segment, dropping 37% year-over-year to $433 million, which raises concerns about the company's financial health despite a slight quarter-over-quarter increase. Furthermore, the company's guidance indicates flat sequential revenue for Q4 and a projected low single-digit year-over-year decline for fiscal year 2025 in its Advanced Technology Solutions (ATS) segment, reflecting ongoing challenges in revenue growth. The decision to not renew a margin-dilutive aerospace program is expected to further impede year-over-year growth, which contributes to the overall negative outlook for Celestica's stock.