Market Overview

Goldman Sachs Removes Flex From Conviction List

Goldman Sachs Removes Flex From Conviction List

Goldman Sachs maintained its bullish stance on the tech manufacturer Flex this week, but removed the stock from its conviction list. 

The Analyst

Mark Delaney maintained a Buy rating on Flex Ltd (NASDAQ: FLEX) and raised the price target from $13 to $14. 

The Thesis

Goldman Sachs continues to expect Flex to improve its margins and grow EPS over time on the back of increased exposure to markets such as medical, auto and industrial, Delaney said in a Thursday note. (See his track record here.)

The firm's EPS estimates are unchanged and are about in-line with the Street, the analyst said.

Flex was added to Goldman's conviction list in June and removed Thursday. During that time, the stock rose 37% versus a 15% gain in the S&P 500. 

“The increase in the stock price was driven primarily by a higher multiple as Flex was able to expand margins and improve its mix. While the P/E multiple discount versus the history is no longer as substantial as it was in June (at the time Flex was trading at 8X NTM Street EPS versus the historical range of 7X-15X), at the current 9.5X multiple the stock is still below the historical average of 10-11X, and the stock still trades below peers on CY20 EPS,” the analyst said. 

Price Action

Flex shares were down 1.84% at $12.54 at the time of publication. The stock has a 52-week high of $12.87 and a 52-week low of $7.35.

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Latest Ratings for FLEX

Dec 2020JP MorganDowngradesOverweightNeutral
Oct 2020RBC CapitalUpgradesSector PerformOutperform
Jul 2020CitigroupMaintainsBuy

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