Flex’s Stock Upgraded: Analyst Sees 27% Upside After Strong Earnings Report

Flex Ltd. (NASDAQ: FLEX), a leading global provider of technology innovation, supply chain solutions, and manufacturing services, has received a notable upgrade from Graig-Hallum analyst Christian Schwab. On July 25, 2024, Schwab elevated Flex's rating from HOLD to BUY, highlighting an improved outlook for the company. The current stock price stands at $30.62, with Schwab’s new price target from $27 to $39, suggesting a potential upside of 27.36%.

Analyst Upgrade and Market Reaction

The upgrade from Graig-Hallum reflects growing confidence in Flex’s performance and future prospects. Schwab's new rating comes in response to the company's robust first-quarter fiscal year 2025 results, which have impressed investors and analysts alike. Flex's improved financial metrics and optimistic guidance for the upcoming quarters have contributed to the positive reassessment.

Strong First Quarter Performance

For the first quarter ended June 28, 2024, Flex reported:

• Net Sales: $6.3 billion

• GAAP Operating Income: $233 million

• Adjusted Operating Income: $306 million

• GAAP Net Income: $139 million

• Adjusted Net Income: $211 million

• GAAP Earnings Per Share (EPS): $0.34

• Adjusted EPS: $0.51

These figures demonstrate Flex's solid financial footing and operational efficiency. The adjusted EPS, in particular, highlights the company's ability to deliver value beyond basic earnings metrics.

Guidance for Upcoming Quarters

Looking ahead, Flex has provided its guidance for the second quarter of fiscal year 2025:

• Revenue: Projected between $6.2 billion and $6.8 billion

• GAAP Operating Income: Expected between $257 million and $297 million

• Adjusted Operating Income: Anticipated between $310 million and $350 million

• GAAP EPS: Forecasted between $0.40 and $0.48

• Adjusted EPS: Expected between $0.52 and $0.60

The adjusted EPS guidance excludes various expenses, including stock-based compensation, intangible amortization, and restructuring charges, providing a clearer picture of underlying performance.

For the full fiscal year 2025, Flex has set ambitious targets:

• Revenue: Between $25.4 billion and $26.4 billion

• GAAP EPS: Projected between $1.60 and $1.80

• Adjusted EPS: Expected between $2.30 and $2.50

This guidance underscores Flex’s commitment to growth and profitability, further supporting Schwab’s upgraded rating.

Company Overview

Flex operates as a key manufacturing partner for a diverse range of industries, leveraging its global workforce and sustainable practices to deliver innovative solutions. With a presence in 30 countries, Flex is well-positioned to address the evolving needs of its customers and maintain its competitive edge in the market.

Conclusion

Flex’s strong quarterly results and optimistic outlook have garnered positive attention from analysts, reflected in the recent upgrade from Graig-Hallum. The company's solid financial performance and strategic guidance suggest a promising path forward, enhancing investor confidence and market interest.