Key Takeaways:
- CLS fell 35% from its June high to $307, entering bear market territory
- Analysts expect Q2 revenue of $4.39 billion and EPS of $2.31
- A beat-and-raise could trigger a rebound; a miss risks a drop below $282
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Celestica drops 35% into bear market ahead of earnings test
Key Takeaways:
- CLS fell 35% from its June high to $307, entering bear market territory
- Analysts expect Q2 revenue of $4.39 billion and EPS of $2.31
- A beat-and-raise could trigger a rebound; a miss risks a drop below $282
Celestica shares plunged 35% to $307, entering a bear market ahead of earnings that will test whether AI demand can justify the valuation.
"The risk-reward is balanced at current levels, and upside is insufficient for a new entry," a Seeking Alpha analyst wrote, assigning a Hold rating with a $335 12-month target and a fair value estimate of $300.
Analysts tracking the Canadian electronics manufacturer expect second-quarter revenue of $4.39 billion, up 51 percent from a year earlier, and earnings per share of $2.31, compared with $1.39 in the same period last year. In its most recent quarter, Celestica posted revenue of $4.05 billion, a 53 percent increase, with gross margin expanding to 10.8 percent and operating profit reaching $272 million. The stock trades at a forward price-to-earnings ratio of about 32, above its historical average.
The selloff has erased all gains from earlier this year and pushed the stock below the $324 neckline of a head-and-shoulders pattern, a bearish technical signal. The 50-day and 100-day exponential moving averages are nearing a bearish crossover. Google's plan to spend $80 billion on capital expenditures this year supports demand for Celestica's hardware design and engineering services, which also serve Alphabet, Meta Platforms, Amazon and Cisco. Its top 10 clients account for about 10 percent of total revenue.
The decline puts the stock at its lowest since January, testing the $282 morning star low that marks the next downside zone if earnings disappoint. A beat-and-raise that confirms margin expansion and sustained AI demand could trigger a mean-reversion rally above the $324 resistance level. Celestica reports earnings next week.
This article is for informational purposes only and does not constitute investment advice.
