On Friday, TD Synnex (NYSE:SNX) shares received a positive update from Raymond (NS:RYMD) James, with analyst Adam Tindle increasing the price target to $150 from $135 while maintaining an Outperform rating on the stock. The company, currently trading at $130.11 and commanding an $11 billion market cap, has shown strong momentum with its stock trading near its 52-week high.
According to InvestingPro analysis, TD Synnex appears undervalued based on its Fair Value metrics. The adjustment follows the company's fourth-quarter fiscal year 2024 results and first-quarter fiscal year 2025 guidance, which showed continued strong growth despite modest profitability under the leadership of new CEO Patrick Zammit.
The company demonstrated robust cash flow in the recent quarter and has returned over 70% of its $1 billion-plus free cash flow (FCF) to shareholders in the past year. InvestingPro data reveals a healthy 6% free cash flow yield and strong financial health, with a notable Piotroski Score of 8, indicating solid operational efficiency.
Management's aggressive share buyback program and consistent dividend payments for 11 consecutive years further demonstrate their commitment to shareholder returns. Tindle highlighted the company's strategic shift towards profitable growth, a change that is expected to become more apparent in the second quarter of fiscal year 2025.
This period will also coincide with an analyst day, potentially offering more insights into the return on invested capital (ROIC) benefits from the company's cycle-to-cycle Hyve trends and the core distribution business's health.
TD Synnex's cash generation is anticipated to surpass $1 billion in fiscal year 2025, with a long-term goal of reaching $1.5 billion. The analyst mentioned that significant share repurchases in the near future could enhance shareholder value and possibly bring free cash flow per share closer to $20 over time, suggesting a stock value that could exceed $200.
The firm intends to delve further into these topics during a non-deal roadshow (NDR) planned for late January. The current outlook for TD Synnex shares seems to reflect a belief in the company's ability to generate value for shareholders through both growth and strategic financial management.
Trading at a P/E ratio of 16.7, the stock presents an interesting opportunity for value investors. For a deeper understanding of TD Synnex's valuation and growth prospects, investors can access comprehensive Pro Research Reports and additional financial insights through InvestingPro.
In other recent news, TD SYNNEX (NYSE:SNX) Corporation outperformed Q4 estimates with adjusted earnings per share of $3.09, surpassing the consensus estimate of $3.06. The company also reported revenue of $15.84 billion, exceeding analysts' projections of $15.25 billion. These developments were driven by a 10% YoY rise in Q4 revenue, primarily from growth in Advanced Solutions and Endpoint Solutions portfolios.
Notably, TD SYNNEX returned $750 million to shareholders in fiscal 2024 through share repurchases and dividends and announced a 10% increase in its quarterly dividend to $0.44 per share. Looking ahead, the company expects Q1 revenue between $14.4 billion and $15.2 billion, compared to the $14.76 billion consensus, and forecasts Q1 adjusted EPS of $2.65 to $3.15, versus analyst estimates of $2.95.
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