Celestica (CLS) Stock Forecast & Price Target

Celestica Inc. has demonstrated substantial growth in its hyperscaler business, which surged 66% year-over-year to $4.8 billion in FY24, accounting for 50% of the company's total revenue. The company's hyperscaler revenue is projected to reach 57% of total revenue by FY25, showcasing a significant increase in its contribution from just 16% in FY20, with a compound annual growth rate (CAGR) of 54% over the past five years. Furthermore, Celestica's operating metrics are on an upward trajectory, with an adjusted EBIT margin forecasted to improve to 8.0% by FY27 and notable increases in adjusted operating margin reflecting strong productivity and efficiency improvements across its manufacturing operations.

Celestica Inc's recent financial performance exhibits concerning trends, particularly with a 4% year-over-year revenue decline in its Advanced Technology Solutions (ATS) segment, attributed to strategic portfolio reshaping in the Aerospace and Defense sector. The Connectivity & Cloud Solutions (CCS) segment has also faced significant challenges, as evidenced by a staggering 38% year-over-year drop in Enterprise revenue in the first half of fiscal year 2025, driven by ongoing program transitions. Multiple factors, including slowing hyperscaler data center investments, potential loss of key customers, and increased competition, underpin a negative outlook for the company's stock, making future revenue growth uncertain amid a backdrop of macroeconomic disruptions.