It might seem like Celestica (TSX:CLS) has experienced a rather significant downturn in its stock price recently. After reaching a 52-week high of $206, the artificial intelligence (AI) stock has since declined by approximately 44% as of writing. That’s a pretty substantial drop from its peak, and it might have some investors feeling a little uneasy.
However, it’s important to remember that the stock market can be quite volatile, and a price decline doesn’t necessarily mean the end of the story for an AI stock. In fact, despite this recent dip, Celestica remains a significant and influential player in two of the most exciting and rapidly growing sectors of the technology industry, namely AI and data centres. These are areas that are seeing massive investment and hold tremendous potential for future growth, which could bode well for Celestica in the long run.
Into the numbers
Let’s delve a little deeper into how the AI stock has been performing financially. In the fourth quarter of 2024, Celestica reported some pretty impressive results. The company’s revenue actually saw a solid increase of 19% compared to the same period in the previous year, reaching a substantial $2.6 billion. Even more encouraging was the significant jump in its earnings per share (EPS), which soared by a whopping 44% to $1.11.
EPS is a key measure of a company’s profitability, representing the portion of a company’s profit allocated to each outstanding share of common stock. A substantial increase like this suggests that the AI stock is not only growing its revenue but also becoming more efficient and profitable. Looking ahead, the company’s management seems quite optimistic about the future. It projects that EPS will continue to grow at a healthy pace, anticipating a further increase of 22% in 2025, with overall revenue expected to hit $10.7 billion. These forward-looking projections indicate strong confidence in the company’s ability to capitalize on the opportunities presented by the AI and data centre markets.
Future outlook
What do the experts who closely follow and analyze stocks think about Celestica’s prospects? Analysts who cover the AI stock have given it a “Very Bullish” rating. This is a strong indicator that they have a very positive outlook on the stock’s future performance. The consensus 12-month target price for Celestica’s stock is $129.17. If their analysis proves to be accurate, this target price suggests a potential upside of a rather attractive 11% from its last closing price.
This means that analysts believe the stock has the potential to appreciate significantly over the next year. Furthermore, investors won’t have to wait too long for more insights into the company’s current performance. Celestica is scheduled to release its financial results for the first quarter of 2025 after the stock market closes on April 24, 2025. This upcoming earnings report will be closely watched by investors and analysts alike for further clues about the company’s trajectory and whether it is on track to meet those optimistic projections.
Bottom line
So, despite the recent decline in Celestica’s stock price, a closer look at the AI stock’s strong financial performance in the recent past and the very positive outlook from analysts paint a more encouraging picture. The company’s significant presence and growth potential within the rapidly expanding AI and data centre sectors are key factors driving this optimism. As AI continues to surge globally and the demand for data centre infrastructure remains robust, Celestica appears to be well-positioned to benefit from these powerful trends.
While the stock price may have experienced a setback, the underlying fundamentals of the AI stock and the positive sentiment from analysts suggest that there could be a significant opportunity for recovery and future growth for Celestica. It’s definitely a company that investors interested in the technology sector, particularly AI and data centres, should continue to monitor closely.
