Contract electronics manufacturer Celestica's (NYSE: CLS) strong quarter and 2001 outlook was applauded by analysts on Thursday. The company received an upgrade from Prudential Securities, while estimates were raised by a host of other brokerages.
Reporting after yesterday's market close, the Canadian company topped fourth-quarter earnings estimates on strong growth in its server and communications business. Company officials also upped earnings and revenue targets for 2001 and said $20 billion in sales by 2003 was attainable.
Shares of Celestica, which also beat estimates last quarter, jumped over 9 percent in early trading, up $6.20 to $72.25.
The contract manufacturing sector has shown strength as of late. Back in December, Celestica inked a $1 billion outsourcing deal with Motorola (NYSE: MOT). Last month, Celestica competitor Solectron (NYSE: SLR) reported a solid quarter and outlook while Flextronics (Nasdaq: FLEX) was the beneficiary of Ericsson's (Nasdaq: ERICY) decision to outsource its production of mobile handsets.
Shares of Solectron rose $1.05, or 2.63 percent, to $40.90 while Flextronics moved up $0.50 to $38.62.
Analysts gushed over Celestica's strong performance and raised estimates across the board.
At Prudential Securities, the company was upgraded to "strong buy" from "accumulate" and 2001 estimates were raised.
"We believe CLS is executing well with existing customers and is well positioned for large OEM (Original Equipment Manufacturer) asset divestitures," analyst Ellen Chae wrote in a research note.
Analyst Chris Whitmore at Deutsche Alex Brown upped earnings targets for fiscal 2001, calling the company's revenue growth "explosive".
At Bear Stearns, earnings estimates were also hoisted, the 12-month price target was raised to $100, and the stock was maintained at a "buy" rating.
In a research note, analyst Thomas A. Hopkins said that the company's outlook remained "white hot" as demand for outsourcing is accelerating, due in part to the deterioration in the end-markets.
At Robertson Stephens fiscal 2001 earnings estimates were raised and a "strong buy" was reiterated on the stock. The story was the same at Bank of America, who maintained a"strong buy" rating on Celestica and set a target price of $140.
At BMO Nesbitt Burns, the stock was maintained at "outperform" while the target price was raised to $127.50 Cdn.
While analyst Andreas Hoppe said he believes Celestica shares will appreciate over the short term, he noted that his "overall concern regarding the technology sector tempers our enthusiasm for sustained multiple expansion."