Key insights
- Rothschild Redburn initiated Celestica with a Buy rating, citing strong revenue growth driven by customized Ethernet switching and AI-related capex increases from hyperscalers. Celestica's potential gains in the ESUN market, leveraging Broadcom silicon and recent contract wins (AMD Helios rack), suggest positive momentum. A significant AI native customer ramping in early 2027 further supports a bullish outlook for Celestica and potentially other AI infrastructure plays.
Investing.com - Rothschild Redburn initiated coverage on Celestica Inc. (NYSE:CLS) with a Buy rating and a price target of $460.00.
The firm cited the company’s revenue growth of over 50%, driven by its increasing share of customized Ethernet switching. Hyper-scalers’ capex increases in fiscal year 2026 are expected to bolster near-term switching revenues, including a recent contract win at a hyper-scaler for a 1.6Tbps CPO Ethernet switch.
Rothschild Redburn anticipates Celestica will gain share of the ESUN switching market. The firm noted ESUN will run on the open-source SoNIC network operating system, which levels the playing field versus original equipment manufacturer switch players such as Arista. Celestica has a track record of incorporating Broadcom switching silicon into its products, and Broadcom’s Tomahawk Ultra silicon is likely to gain widespread adoption for ESUN.
The company’s recent contract win for AMD’s Helios rack represents early evidence of its potential traction within ESUN, according to the analyst. For investors seeking deeper insights into Celestica’s financial health and growth prospects, InvestingPro offers comprehensive analysis including Fair Value estimates, detailed financial metrics, and expert ProTips. The platform also features a Pro Research Report for CLS, one of 1,400+ US equities covered with actionable intelligence and intuitive visuals.
Celestica’s Enterprise business is gaining traction in rack-scale solutions. Management indicated a significant AI native customer will ramp in early 2027.
In other recent news, Celestica Inc. reported strong financial performance for the first quarter of 2026, surpassing analyst expectations. The company achieved earnings per share of $2.94, exceeding the forecasted $2.82, and reported revenue of $5.51 billion, slightly above the anticipated $5.49 billion. These results were achieved despite component shortages affecting the quarter. Meanwhile, Celestica has opened orders for its DS6000-series 1.6TbE AI data center switches, offering two models powered by Broadcom Tomahawk 6 switch silicon.
In addition, CIBC raised its price target for Celestica to $480 from $425, maintaining an Outperformer rating, citing resolved supply constraints and an aggressive ramp-up plan for 2026-2027. RBC Capital also increased its price target to $440 from $400, highlighting strong demand momentum and maintaining an Outperform rating. Both firms reflect positive sentiment on Celestica’s future growth prospects. These developments underscore a period of significant activity for Celestica, indicating continued investor interest.
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