Market Overview

Raymond James: Macro Headwinds Ahead for Avnet

Share:
Raymond James: Macro Headwinds Ahead for Avnet

Avnet, Inc. (NASDAQ: AVT) reported second-quarter results Thursday that were in-line with expectations, but its Q3 guidance reflected softness in Asia revenue.

Although the company's largest region is facing macro challenges, Avnet’s run rate EPS in the current quarter should be higher than $4, while cost optimization is only about one-third complete, according to Raymond James.

The Analyst

Analyst Adam Tindle maintains a Strong Buy rating on Avnet with an unchanged $52 price target.

The Thesis

The initial focus is likely to be on Avnet’s guidance, Tindle said in a Friday note.

The company is controlling what it can and has a long runway left in cost optimization, the analyst said. With Avnet’s shares trading around $40, the margin of safety seems compelling, he said. 

The midpoint of the March guidance implies a sequential decline in revenue of around 7 percent, which is significantly below seasonal norms of 5-percent growth, Tindle said. 

Raymond James cut its 2019 revenue and EPS estimates from $20.5 billion to $19.7 billion and from $4.21 to $4.20, respectively. The revenue and EPS estimates for 2020 have been lowered from $20 billion to $19.3 billion and from $4.46 to $4.40, respectively.

Avnet management repurchased about 5 million shares in Q2. The authorization, estimated at around 10 percent of the electronics company's market cap, presents “the right combination for value creation over time, and this narrative should ultimately trump near-term macro headwinds,” Tindle said. 

Price Action

Avnet shares were down 1.13 percent at $41.18 at the time of publication Friday. 

Related Links:

Avnet's Revenue Recovery, Margin Improvement Trigger Bank Of America Upgrade

Earnings Scheduled For January 24, 2019

Photo courtesy of Avnet. 

Latest Ratings for AVT

DateFirmActionFromTo
Oct 2019MaintainsMarket Perform
Oct 2019MaintainsStrong Buy
Oct 2019DowngradesHoldSell

View More Analyst Ratings for AVT
View the Latest Analyst Ratings

Posted-In: Adam TindleAnalyst Color Earnings News Guidance Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (AVT)

View Comments and Join the Discussion!
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

ESG ETFs Are Growing, But Still Have A Long Way To Go

35 Stocks Moving In Friday's Mid-Day Session