On Tuesday, Stifel, a financial services firm, increased its stock price target on shares of TD Synnex (NYSE:SNX) to $130.00, up from the previous target of $120.00. The firm has maintained a Buy rating on the stock.
The adjustment follows TD Synnex's first-quarter earnings report and second-quarter guidance which presented a mixed performance. Nonetheless, the firm sees indications that end demand is stabilizing and anticipates an upturn in the second half of the year.
TD Synnex reported a year-over-year decline in net revenue and gross billings for the quarter by 7.6% and 4.6%, respectively. This was attributed to reduced demand for smartphones and components. Still, the company experienced year-over-year growth in PC sales for the first time in several quarters. The outlook for the second half of 2024 is more optimistic, with expectations of accelerated growth in PC sales.
The company also forecasts a stabilization and subsequent growth in demand for its advanced solutions products, which had previously seen a decrease due to a drop-off in backlog. This growth is expected to be driven by advancements in artificial intelligence in the latter half of the fiscal year 2024.
In light of these developments, Stifel has revised its forward revenue estimates for TD Synnex downwards. Nevertheless, the firm has increased its earnings per share (EPS) estimates, reflecting an anticipated improvement in the product mix and operational leverage.
The company's focus on expanding its cloud, software, and services offerings is expected to continue bolstering margins going forward.
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