Celestica Inc. has been a top performing stock over the past year, and one analyst says the shares have benefited from a significant gain in momentum.
In September, the Toronto-based company was included on the TSX30, a list of top-ranking firms based on dividend-adjusted share price performance over a three-month period.
“The momentum has continued all the way through the year,” Robert Young, the managing director and head of research at Canada Canaccord Genuity, said in an interview with BNN Bloomberg Friday.
“I think the street views the guidance that the company has given as conservative. They have gotten themselves into a steady beat and raise cadence.”
He added that Celestica’s major customers include hyper scalers, like Google and Meta.
According to Young, Celestica has stated that it has business with the top five hyper scalers, “which would necessarily include Microsoft and Apple likely.”
According to Young, the hyper scalers are the largest buyers of technology hardware currently and account for a significant chunk of Celestica’s revenue, potentially around 50 per cent.
“They’re setting the standard for how data centres are built at scale, and so it puts a halo around what Celestica is doing because Google is turning to them to design their networking gear, which is customized to their specific application, clean AI,” he said.
“And they’re also using them to build AI servers and arguably you would say that Google would be at the very high end of the capability spectrum when it comes to developing, designing and building these servers.”
Young added that the street is taking notice of Celestica’s higher value elements built around its IP as an original equipment manufacturer (OEM), where it was previously viewed as an electronics manufacturing services (EMS) vendor.