Celestica stock is flying in the premarket today, as investors cheered its financial results, which showed that its growth accelerated amid the ongoing AI boom. It jumped by over 26%, making it one of the best-performing companies in Wall Street. The rebound helped to pare back some of the losses it made a few weeks ago.
Celestica’s business is firing on all cylinders
Celestica, a top Canadian technology company, is firing on all cylinders as the artificial intelligence boom continues. Its results, published on Monday, showed that its revenue jumped by 83% to $5.83 billion. It had made $3.19 billion in the same period last year.
Celestica has benefited from the rising demand from hyperscalers like Apple and Amazon, which are investing heavily in the AI industry.
The company’s profits surged, with the earnings-per-share (EPS) rising to $3.26 from $2.31 in the same period last year. Most importantly, the company expects that its annual earnings will be much better than expected.
Analysts were expecting its annual revenue to be $20.6 billion, followed by $35.7 billion in 2027. In contrast, the management’s guidance is that its revenue will jump to over $40 billion next year, a figure that the company expects.
Similarly, Celestica believes that its fourth-quarter revenue will be between $6.27 billion and $6.57 billion. The guidance was also higher than the average estimate $5.47 billion.
Celestica’s profits are also expected to keep growing, with the earnings-per-share (EPS) rising to $2.96.
These earnings and guidance makes Celestica one of the fastest-growing companies in the world. For example, if its annual revenue comes in at $40 billion next year, it will mark an approximately 82% growth rate.
These numbers make Celestica one of the most undervalued companies in the industry. The company has a forward price-to-earnings ratio of 23.2, slightly higher than the sector median of 21.6. It is also modestly higher than the five-year average of 19.
These factors explain why analysts have turned bullish on the company. BMO Capital hiked its target to $400, while RBC has risen its target to $450. TD and UBS have a target price of $430.
Celestica stock price technical analysis
The daily chart shows that the CLS stock price peaked at $472 in June this year and then started a bearish trend, eventually moving to $244 on Monday. Its lowest level this week coincided with its lowest swings in March.
The stock has remained below the 50-day and 200-day Exponential Moving Averages (EMA). This retreat happened as investors dumped companies in the artificial intelligence industry amid fears of an AI bubble.
The stock then bounced back to $286 after publishing its financial results. This price coincided with the weak, stop & reverse level of the Murrey Math Lines tool.
Therefore, the most likely scenario is where the stock continues rising in the near future, eventually reaching the psychological level of $300. The stock will then remain under pressure as long as the AI jitters are there.