We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CLS' Raised Outlook Oozes Confidence: Reason to Bet on the Stock?
Read MoreHide Full Article
Key Takeaways
CLS raised 2026 outlook to $19B revenue, $10.15 adjusted EPS and 8.1% adjusted margin.
Celestica sees hyperscale AI/ML demand driving routers, switches, servers and storage for data centers.
CLS expanded credit agreement to about $2.5B, with $1.75B revolver and maturity extended to April 2031.
In concurrence with the first-quarter 2026 results, Celestica Inc. (CLS - Free Report) raised its 2026 annual outlook. The company now expects revenues of $19 billion (up from $17 billion expected earlier), adjusted earnings of $10.15 per share (up from $8.75) and adjusted operating margin of 8.1% (up from 7.8%), while maintaining its prior free cash flow outlook of $500 million. Celestica also amended and upsized its senior secured credit agreement to approximately $2.5 billion, including an increase in revolver commitments to $1.75 billion and an extension of maturity to April 2031.
Diversified Portfolio and R&D Focus Lend Support to CLS
Celestia has been benefiting from the ongoing generative AI boom, driven by solid demand trends for AI/ML compute and networking products from hyperscale customers. AI investments are driving demand for its enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers, and storage-related products.
Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries. The company continuously enhances its manufacturing, engineering, design, quality and supply-chain capabilities while developing trusted relationships with leading customers. This strategy has augmented its market penetration in each of the markets it serves.
Its customer base includes several leading manufacturers from multiple industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers. Such a diverse customer base enhances business resilience by reducing dependence on a single industry and minimizing the effects on financial results from an economic downturn in one specific sector.
Solid Revenue Growth Momentum Aids CLS
Celestica has witnessed a healthy revenue growth over the past few quarters, backed by the growing proliferation of AI-based applications and generative AI tools. The company has launched its latest storage platform, the SD6300 ultra-dense storage expansion system, to cater to the exponential AI data growth across traditional enterprise and hyperscale data centers. With a compact footprint of only 1125 mm (including cable management assembly), the SD6300 maximizes utilization of existing data center floor space as it can be accommodated within standard 1200 mm racks.
The company also introduced two new 1.6TbE data center switches, the DS6000 and DS6001, to support high-bandwidth, AI/ML data center applications. While the DS6000 is a 3RU, 64-port x 1.6TbE data center switch for traditional air-cooled data center installations, the DS6001 is a 2OU, 64-port x 1.6TbE switch offering a hybrid cooled solution based on the 21-inch OCP ORv3 rack. Together, the switches double the switching capacity of Celestica’s current offerings.
Image Source: Zacks Investment Research
Price Performance
Celestica has surged 312.7% over the past year compared with the industry’s growth of 204.9%. It has also outperformed peers like Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) . Flex has gained 245.7%, and Jabil is up 127% over this period.
One-Year CLS Stock Price Performance
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Celestia for 2026 have moved up 67.4% to $10.16 over the past year, while the same for 2027 has improved 83.6% to $14.6. The positive estimate revision depicts optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
End Note
As the company scales up production volumes and costs go down, the adoption of Celestica’s products is likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense. The positive estimate revision depicts bullish sentiments for the stock.
Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
CLS' Raised Outlook Oozes Confidence: Reason to Bet on the Stock?
Key Takeaways
In concurrence with the first-quarter 2026 results, Celestica Inc. (CLS - Free Report) raised its 2026 annual outlook. The company now expects revenues of $19 billion (up from $17 billion expected earlier), adjusted earnings of $10.15 per share (up from $8.75) and adjusted operating margin of 8.1% (up from 7.8%), while maintaining its prior free cash flow outlook of $500 million. Celestica also amended and upsized its senior secured credit agreement to approximately $2.5 billion, including an increase in revolver commitments to $1.75 billion and an extension of maturity to April 2031.
Diversified Portfolio and R&D Focus Lend Support to CLS
Celestia has been benefiting from the ongoing generative AI boom, driven by solid demand trends for AI/ML compute and networking products from hyperscale customers. AI investments are driving demand for its enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers, and storage-related products.
Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries. The company continuously enhances its manufacturing, engineering, design, quality and supply-chain capabilities while developing trusted relationships with leading customers. This strategy has augmented its market penetration in each of the markets it serves.
Its customer base includes several leading manufacturers from multiple industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers. Such a diverse customer base enhances business resilience by reducing dependence on a single industry and minimizing the effects on financial results from an economic downturn in one specific sector.
Solid Revenue Growth Momentum Aids CLS
Celestica has witnessed a healthy revenue growth over the past few quarters, backed by the growing proliferation of AI-based applications and generative AI tools. The company has launched its latest storage platform, the SD6300 ultra-dense storage expansion system, to cater to the exponential AI data growth across traditional enterprise and hyperscale data centers. With a compact footprint of only 1125 mm (including cable management assembly), the SD6300 maximizes utilization of existing data center floor space as it can be accommodated within standard 1200 mm racks.
The company also introduced two new 1.6TbE data center switches, the DS6000 and DS6001, to support high-bandwidth, AI/ML data center applications. While the DS6000 is a 3RU, 64-port x 1.6TbE data center switch for traditional air-cooled data center installations, the DS6001 is a 2OU, 64-port x 1.6TbE switch offering a hybrid cooled solution based on the 21-inch OCP ORv3 rack. Together, the switches double the switching capacity of Celestica’s current offerings.
Image Source: Zacks Investment Research
Price Performance
Celestica has surged 312.7% over the past year compared with the industry’s growth of 204.9%. It has also outperformed peers like Flex Ltd. (FLEX - Free Report) and Jabil Inc. (JBL - Free Report) . Flex has gained 245.7%, and Jabil is up 127% over this period.
One-Year CLS Stock Price Performance
Image Source: Zacks Investment Research
Estimate Revision Trend
Earnings estimates for Celestia for 2026 have moved up 67.4% to $10.16 over the past year, while the same for 2027 has improved 83.6% to $14.6. The positive estimate revision depicts optimism about the stock’s growth potential.
Image Source: Zacks Investment Research
End Note
As the company scales up production volumes and costs go down, the adoption of Celestica’s products is likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense. The positive estimate revision depicts bullish sentiments for the stock.
The firm delivered a trailing four-quarter average earnings surprise of 8%. It has a long-term earnings growth expectation of 45.3% and a VGM Score of B. Celestia currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.