On Monday, Loop Capital reiterated its Buy rating and $150.00 price target on shares of TD Synnex (NYSE: SNX), following the company's earnings report for the November quarter released on January 10. The company, currently trading near its 52-week high of $134.48, has shown impressive momentum with a 13% gain in the past week.
According to InvestingPro analysis, TD Synnex appears undervalued, with strong financial health metrics supporting its $58.45 billion revenue base. TD Synnex's recent financial performance was bolstered by a 10% year-over-year increase in revenue from its portfolio, which includes endpoint and advanced solutions, attributed to an improving IT spending environment.
The company's Endpoint Solutions segment reported a 3% year-over-year revenue growth, primarily fueled by sales of PCs and peripherals. This marks the second consecutive quarter of growth in the PC sector, especially within the commercial segment.
The trend is believed to be partly driven by the anticipation of tariffs, which may be accelerating PC refresh activities. TD Synnex anticipates this dynamic to persist throughout the fiscal year 2025 and aims to leverage the growth of peripherals to create PC bundles. With a modest P/E ratio of 16.85x and gross margins of 6.81%, the company maintains competitive positioning in its market.
In the realm of advanced solutions, TD Synnex achieved an 11% year-over-year revenue growth, excluding contributions from Hyve. The company experienced broad-based double-digit growth in cloud, security, data, and analytics segments.
Hyve, in particular, has continued to gain strong customer traction, also showing double-digit year-over-year revenue growth. For deeper insights into TD Synnex's growth metrics and financial health score of "GREAT," consider accessing the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
Regarding the demand for AI servers, TD Synnex observed that it is currently concentrated among Tier 2 Cloud Service Providers (CSPs), with enterprises still in the exploratory phase of potential AI server use cases. Meanwhile, traditional servers are seeing a resurgence in demand. To capitalize on these trends, TD Synnex plans to enhance its Hyve services and capabilities, focusing on liquid cooling and power management systems.
In other recent news, TD Synnex has been making waves in the financial world with its performance in the fourth quarter. The company outperformed Q4 estimates, reporting an adjusted earnings per share of $3.09, which surpassed the consensus estimate of $3.06. Moreover, TD Synnex reported revenue of $15.84 billion, beating analysts' projections of $15.25 billion. This success was attributed to a 10% YoY rise in Q4 revenue, primarily due to growth in Advanced Solutions and Endpoint Solutions portfolios.
In addition to this, Raymond (NS:RYMD) James analyst Adam Tindle has raised the price target for TD Synnex to $150 from $135, maintaining an Outperform rating on the stock. This decision was influenced by the company's robust cash flow and consistent dividend payments for 11 consecutive years, demonstrating a strong commitment to shareholder returns.
Looking forward, TD Synnex expects Q1 revenue to fall between $14.4 billion and $15.2 billion, compared to the $14.76 billion consensus. The company also forecasted Q1 adjusted EPS of $2.65 to $3.15, versus analyst estimates of $2.95. As the company continues to demonstrate strong financial health, investors are keeping a close eye on its future performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.