Plexus' Strength In Commercial Aerospace To Outweigh Demand Issues In Industrial And Healthcare Life Science Market: Analyst

Needham analyst James Ricchiuti reiterated the Buy rating on Plexus Corp PLXS, raising the price target to $107 from $105.

The company recently reported Q3 results, where it initiated Q4 revenue guidance of $1 billion-$1.04 billion, with GAAP EPS of $1.18-$1.36.

The analyst notes that PLXS enters the final quarter of the fiscal year with mixed demand in its Industrial and Healthcare Life Science market verticals while commercial aerospace remains strong.

The Q4 revenue guidance depicts it to be flat sequentially at the midpoint of the range and down 9% Y/Y at the midpoint.

With recent cost actions, PLXS should be able to navigate the slower patch in demand that is expected over the next 2-3 quarters, the analyst adds.

On the positive end, Ricchiuti views the company as a top-tier EMS provider with an industry-leading GAAP operating margin in a normal operating environment. 

The company continues to show solid new-program wins in higher-growth verticals like healthcare/life sciences, industrials, aerospace, and defense while maintaining a large pipeline of qualified opportunities.

However, considering the demand issues, the analyst trimmed Q4 GAAP EPS estimate to $1.26 from $1.39, with revenue now forecast at $1.020 billion vs. $1.060 billion previously. 

Ricchiuti also reduced our FY24 GAAP EPS estimate to $6.00 from $6.29 on revenues of $4.47 billion vs. the previous $4.57 billion estimate.

Price Action: PLXS shares are trading lower by 2.00% to $96.57 on the last check Friday.