On Tuesday, Benchmark, a financial advisory firm, has increased its price target for Plexus Corp (NASDAQ:PLXS) to $150 from the previous target of $145, while maintaining a "Buy" rating on the stock.
"Plexus continues to execute well against the volatile macro environment with new program win momentum and improving fundamentals," said Benchmark analysts.
Plexus, which is involved in providing electronics manufacturing services, has managed to navigate through challenges such as the Boeing (NYSE:BA) strike and the potential work stoppage by East coast Longshoremen. Benchmark's assessment suggests that the company's revenue, approximately 5% of which is contributed by Boeing, is expected to be balanced by new initiatives in the Space and Semiconductor Capital Equipment sectors.
The firm acknowledges the difficulties in predicting the broader impact of shipping disruptions but believes that Plexus's strategy of manufacturing in the same country where products are sold, known as "in-country-for-country," will give it an advantage over competitors. This approach, coupled with Plexus's focus on higher-value product manufacturing rather than consumables and basic assembly, is expected to help the company withstand market pressures better than its peers.
In other recent news, Plexus Corp has released strong financial figures for its fiscal third quarter of 2024, surpassing revenue expectations by reporting $961 million and generating a substantial $114 million of free cash flow. In addition to these robust results, the company has announced a new $50 million stock buyback plan, set to commence following the expiration of its current buyback initiative.
Recent developments also include significant wins in the healthcare life sciences sector, with the company securing over $500 million in contracts over the past four quarters. Despite lower than expected growth in the aerospace and defense sector due to supply constraints and customer design changes, Plexus Corp anticipates a mid-single-digit revenue increase in the fiscal fourth quarter. Furthermore, the company's funnel of qualified manufacturing opportunities has grown to $3.6 billion, indicating potential for future growth.
Finally, Plexus Corp has indicated potential growth in power opportunities related to data centers, influenced by the impact of AI. As the company looks ahead, it projects a revenue growth of 9-12% for fiscal 2025, underscoring its robust financial health and strategic focus on operational efficiency and customer service excellence.
InvestingPro Insights
Plexus Corp's recent performance aligns with Benchmark's positive outlook, as evidenced by several key metrics from InvestingPro. The company's stock has shown impressive momentum, with a 33.05% price return over the last three months and a substantial 43.32% return over the past six months. This strong performance has pushed the stock price to 98.92% of its 52-week high, supporting Benchmark's decision to raise the price target.
InvestingPro Tips highlight that three analysts have revised their earnings upwards for the upcoming period, which corroborates Benchmark's optimistic stance. Additionally, the company's profitability over the last twelve months and analysts' predictions of continued profitability this year reinforce the positive outlook.
However, investors should note that Plexus is trading at a high earnings multiple, with a P/E ratio of 33.56. This valuation metric suggests that the market has high expectations for the company's future growth, aligning with Benchmark's bullish view on Plexus's potential in the Space and Semiconductor Capital Equipment sectors.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Plexus Corp, providing a deeper understanding of the company's financial health and market position.
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