Mining & Metals
CIBC Raises Celestica's Price Target to US$480 From US$425, Reiterates its Outperformer Rating
CIBC Capital Markets reiterated its outperformer rating on the shares of Celestica (CLS.TO, CLS) while raising its price target to US$480 from US$425 after the company reported its first-quarter financial results on Monday.The company's Q1 was in line on supply constraints that are now largely resolved, said CIBC, adding that the company reiterated an "aggressive 2026-2027 ramp-up" including with its key "digital-native" customer, which CIBC believes to be OpenAI."A near-term overhang is the narrative around OpenAI potentially overbuilding vs. demand and additional supply chain shortages, which could keep sentiment pressured," said CIBC. "Despite this, with hyperscaler capex visibility improving (GOOGL/META/AMZN) and H2/26 ramp-ups/expansions ahead, we still view guidance/Street as conservative and expect upward estimate drift through 2026 as Q1 prints de-risk capex assumptions."Celestica's "improved visibility" reflects its leadership in data center networking switches and expanding enterprise server programs, said CIBC, and added it now sees a "clearer multi-year ramp-up for 1.6T networking programs starting in late 2026 and accelerating into 2027, supported by multiple customers and its strategic partners including AVGO."Celestica's new hyperscaler Ethernet-switch contract win in the quarter, which ramps up in H2/27, also supports this view, added CIBC.While Q1 was impacted by supply constraints, these have subsided and the company has confidence it can both catch up in subsequent quarters and support demand through 2028, stated CIBC."We reiterate our Outperformer rating and frame the selloff as a buy-the-dip setup," said CIBC. "Our updated price target is (US)$480 and is based on a blended valuation of 32x our 2027E EPS forecast (primary) and 24x our 2027E EBITDA forecast (secondary)."CIBC's target multiples for Celestica reflect "improved visibility to upward revisions in AI datacentre capex spending from significantly improved model performance," added CIBC.Price: $500.53, Change: $+7.31, Percent Change: +1.48%
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