UPDATE: Goldman Sachs Resumes Coverage on Flextronics on Improving ROIC, Increased Consumer Concentration

In a report published Wednesday, Goldman Sachs analyst Mark Delaney resumed coverage on

with a Neutral rating and $9.50 price target. In the report, Goldman Sachs noted, “Positively, we believe that Flextronics will significantly improve its ROIC (in particular on a GAAP basis) in the coming quarters, as (1) It recently completed a roughly $265 mn restructuring program, and the company estimates this will result in $160 mn of annualized savings, and (2) Flextronics is ramping production of new products for Google (Moto X) and Microsoft (Xbox One). We estimate that the Moto X and Xbox One ramps could each add $500-$900 mn to revenue in 4QCY13. However, we believe these factors are offset by the fact that (1) Flextronics's customer concentration and revenue exposure in the more volatile and lower margin high velocity segment is increasing and (2) Flextronics is one of the best performing EMS stocks in 2013 YTD (up 48% YTD vs. the group average up 43%), and it now trades at the high end of its historical range on forward P/E.” Flextronics International Ltd. closed on Tuesday at $9.20.