TORONTO - Celestica Inc . (TSX: NYSE:CLS) (NYSE: CLS), known for its design and manufacturing services, announced today the launch of its new DS4100 data center switch, aiming to cater to the increasing bandwidth requirements of AI/ML data center networking. The DS4100 is a 1U top-of-rack switch featuring the Broadcom (NASDAQ:AVGO) TH4-12.8T chipset and supports 16x 800G OSFP ports.
The switch is engineered to offer a non-blocking switching capacity of 12.8Tbps and is designed with field-replaceable fans and redundant hot-swappable power supplies. It also accommodates flexible I/O configurations to support NICs with port speed options ranging from 100GbE to 400GbE and is powered by an x86-based CPU to handle various data center applications.
Celestica's DS4100 is tailored for AI/ML, Big Data Analytics, hyperscale data centers, cloud computing, high-performance computing (HPC), and network backbones. The company supports the use of SONiC as a Network Operating System (NOS) and includes the Open Network Install Environment (ONIE) installer for additional open and third-party network operating systems.
Gavin Cato, Head of Portfolio Solutions and CTO at Celestica, emphasized the switch's performance capabilities for demanding AI/ML applications and the redundancy and flexibility needed in modern data centers. Alan Weckel, Founder and Technology Analyst at 650 Group, highlighted Celestica's potential to meet the growing market demand for high-performance data center switches.
The DS4100 will be showcased at the 2024 OCP Global Summit in San Jose, California, from October 15-17, alongside the OCP Inspired™ DS5000 800G switch.
This announcement is based on a press release statement and aims to inform about the new product offering by Celestica. Celestica stands as a strategic player in the field of design, manufacturing, and supply chain solutions, with a global presence across North America, Europe, and Asia. For further details, Celestica's securities filings can be accessed on their respective regulatory websites.
In other recent news, Celestica's second-quarter 2024 earnings exceeded consensus estimates, leading to an upward revision of its 2024 outlook, anticipating a nearly 50% increase in non-IFRS EPS to $3.62, and a revenue jump of almost 20% to $9.5 billion compared to the previous year. Stifel upgraded Celestica's stock from Hold to Buy, maintaining a price target of $58.00, despite market concerns over a potential slowdown in AI investments. The firm's analysts believe that the company's 2025 earnings per share (EPS) estimate of $4.00 is achievable, even considering an anticipated decrease in server sales due to a technological shift by a major customer.
Celestica also expanded its senior secured credit agreement to $1.5 billion to support its growth initiatives. RBC Capital maintained its Outperform rating on Celestica, raising the price target to $65.00 from $63.00, citing the company's strong Q2 results and its expansion into the hyperscaler market. However, a CIBC analyst downgraded Celestica to Neutral, despite raising the stock price target, due to potential slower growth in the Enterprise segment.
Argus, RBC Capital, and Stifel have responded to these developments by raising their price targets for Celestica, citing factors such as the company's diversification into high-growth sectors and advancements in artificial intelligence and machine learning. These are recent developments providing investors with insights into Celestica's financial performance and analyst perspectives.
InvestingPro Insights
Celestica's launch of the DS4100 data center switch aligns with the company's strong market position and recent financial performance. According to InvestingPro data, Celestica has demonstrated impressive growth, with a revenue increase of 13.45% over the last twelve months as of Q2 2024, reaching $8.78 billion. This growth is particularly evident in the most recent quarter, where revenue surged by 23.33%, indicating accelerating momentum in the company's core business areas.
The company's focus on high-performance computing solutions like the DS4100 switch appears to be paying off, as reflected in its robust financial metrics. Celestica's adjusted operating income for the last twelve months stood at $500.7 million, with an operating income margin of 5.7%. This solid profitability is further underscored by an InvestingPro Tip noting that Celestica is trading at a low P/E ratio relative to its near-term earnings growth, suggesting potential undervaluation despite its recent stock price surge.
Investors have taken notice of Celestica's performance, with the stock price showing a remarkable 131.13% return over the past year. The company is currently trading near its 52-week high, with its price at 96.47% of the peak. This upward trajectory is supported by another InvestingPro Tip indicating that 8 analysts have revised their earnings expectations upwards for the upcoming period, signaling confidence in Celestica's future performance.
For readers interested in a deeper dive into Celestica's prospects, InvestingPro offers 16 additional tips that could provide valuable insights for investment decisions.
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