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Plexus Plunges 17% Year to Date: Should You Sell or Hold the Stock?
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Plexus Corporation’s (PLXS - Free Report) shares have faced a challenging start to 2025, down 16.8% year to date. This decrease is steeper than the Electronic Manufacturing Industry’s decline of 3.6%. Meanwhile, the S&P 500 composite and the broader Computer Technology Sector have registered losses of 3.3% and 8%, respectively.
Price Performance
Image Source: Zacks Investment Research
The decline is likely to make investors reassess their positions. Let us dive into PLXS’ pros and cons and determine the best course of action for your portfolio.
Why is PLXS Stock Declining?
Continued demand weakness in the industrial market sector remains concerning for Plexus in the near term. Revenues for the fiscal second quarter are forecasted to sequentially decline in high-single-digit to low-double-digit for the Industrial sector, owing to demand instability across several subsectors offsetting gains in the semiconductor capital equipment vertical. We expect quarterly revenues from Industrial sector to be down 4.3% year over year to $400.4 million.
Moreover, Plexus now expects more subdued growth for Aerospace/Defense sector in fiscal 2025 compared with earlier expectations, owing to near-term challenges within the commercial aerospace subsector. For fiscal 2025, we expect revenues from Aerospace/Defense sector to be up 2%.
Plexus also acknowledged the evolving geopolitical environment and the impact of global trade policies. Uncertainty in global trade policies and geopolitical tensions could disrupt the supply chain, increase costs and cause delays in production or shipment of key components, which could ultimately impact PLXS’ revenues and margins.
Given these factors, analysts seem bearish about the stock, which is evident from the downward revision in earnings estimates. In the past 60 days, analysts have decreased their earnings estimates for the current quarter by 0.7% to $1.54.
Image Source: Zacks Investment Research
It is trading below its 50-day moving average, indicating bearish sentiment among investors. The stock closed at $130.24 in the last trading session, down 24.7% from its 52-week high of $172.89.
PLXS’ Long-Term Outlook
A healthy number of program wins will drive the top-line performance. In the fiscal first quarter, Plexus won 30 manufacturing programs, representing $212 million in annualized revenues once fully ramped into production. It ended the fiscal first quarter with manufacturing program wins, including $130 million from the Healthcare/Life Sciences sector.
The funnel of qualified manufacturing opportunities is pegged at $3.6 billion, indicating a strong pipeline for growth. Plexus expects new program ramps across all three segments to aid fiscal 2025 revenue growth.
Plexus generated $27 million in free cash flow in the last reported quarter, which significantly exceeded expectations. Management now expects to generate $100 million of free cash flow for fiscal 2025 compared with the earlier guided range of $50 million to $100 million. Our estimate for free cash flow is pegged at $100.1 million for fiscal 2025. The robust cash generation ensures that Plexus has a healthy financial foundation to support growth and investment in the business.
How to Play PLXS Stock
Though PLXS has a positive long-term outlook, the expectation for the near term remains somewhat muddled. Bearish technical indicators, downward estimate revision and cautious management outlook for 2025 warrant caution.
It currently has a Zacks Rank #4 (Sell), which implies that investors should stay away from the stock for the time being.
The Zacks Consensus Estimate for CLS’ 2025 EPS is pegged at $4.78, unchanged in the past seven days. CLS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while matching on one occasion, with the average surprise being 10.27%. Its shares have increased 92.4% in the past year.
The Zacks Consensus Estimate for JBL’s fiscal 2025 earnings is pegged at $8.96 per share, up 2.3% in the past seven days. JBL’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 4.86%.
The Zacks Consensus Estimate for SANM’s fiscal 2025 EPS is pegged at $6.01, unchanged in the past seven days. SANM’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, with the average surprise being 2.2%.
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Plexus Plunges 17% Year to Date: Should You Sell or Hold the Stock?
Plexus Corporation’s (PLXS - Free Report) shares have faced a challenging start to 2025, down 16.8% year to date. This decrease is steeper than the Electronic Manufacturing Industry’s decline of 3.6%. Meanwhile, the S&P 500 composite and the broader Computer Technology Sector have registered losses of 3.3% and 8%, respectively.
Price Performance
Image Source: Zacks Investment Research
The decline is likely to make investors reassess their positions. Let us dive into PLXS’ pros and cons and determine the best course of action for your portfolio.
Why is PLXS Stock Declining?
Continued demand weakness in the industrial market sector remains concerning for Plexus in the near term. Revenues for the fiscal second quarter are forecasted to sequentially decline in high-single-digit to low-double-digit for the Industrial sector, owing to demand instability across several subsectors offsetting gains in the semiconductor capital equipment vertical. We expect quarterly revenues from Industrial sector to be down 4.3% year over year to $400.4 million.
Moreover, Plexus now expects more subdued growth for Aerospace/Defense sector in fiscal 2025 compared with earlier expectations, owing to near-term challenges within the commercial aerospace subsector. For fiscal 2025, we expect revenues from Aerospace/Defense sector to be up 2%.
Plexus also acknowledged the evolving geopolitical environment and the impact of global trade policies. Uncertainty in global trade policies and geopolitical tensions could disrupt the supply chain, increase costs and cause delays in production or shipment of key components, which could ultimately impact PLXS’ revenues and margins.
Given these factors, analysts seem bearish about the stock, which is evident from the downward revision in earnings estimates. In the past 60 days, analysts have decreased their earnings estimates for the current quarter by 0.7% to $1.54.
Image Source: Zacks Investment Research
It is trading below its 50-day moving average, indicating bearish sentiment among investors. The stock closed at $130.24 in the last trading session, down 24.7% from its 52-week high of $172.89.
PLXS’ Long-Term Outlook
A healthy number of program wins will drive the top-line performance. In the fiscal first quarter, Plexus won 30 manufacturing programs, representing $212 million in annualized revenues once fully ramped into production. It ended the fiscal first quarter with manufacturing program wins, including $130 million from the Healthcare/Life Sciences sector.
The funnel of qualified manufacturing opportunities is pegged at $3.6 billion, indicating a strong pipeline for growth. Plexus expects new program ramps across all three segments to aid fiscal 2025 revenue growth.
Plexus generated $27 million in free cash flow in the last reported quarter, which significantly exceeded expectations. Management now expects to generate $100 million of free cash flow for fiscal 2025 compared with the earlier guided range of $50 million to $100 million. Our estimate for free cash flow is pegged at $100.1 million for fiscal 2025. The robust cash generation ensures that Plexus has a healthy financial foundation to support growth and investment in the business.
How to Play PLXS Stock
Though PLXS has a positive long-term outlook, the expectation for the near term remains somewhat muddled. Bearish technical indicators, downward estimate revision and cautious management outlook for 2025 warrant caution.
It currently has a Zacks Rank #4 (Sell), which implies that investors should stay away from the stock for the time being.
Stocks to Consider
Some better-ranked stocks worth consideration within the same industry space are Celestica Inc (CLS - Free Report) , Jabil Inc. (JBL - Free Report) and Sanmina Corporation (SANM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CLS’ 2025 EPS is pegged at $4.78, unchanged in the past seven days. CLS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while matching on one occasion, with the average surprise being 10.27%. Its shares have increased 92.4% in the past year.
The Zacks Consensus Estimate for JBL’s fiscal 2025 earnings is pegged at $8.96 per share, up 2.3% in the past seven days. JBL’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 4.86%.
The Zacks Consensus Estimate for SANM’s fiscal 2025 EPS is pegged at $6.01, unchanged in the past seven days. SANM’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing once, with the average surprise being 2.2%.