PLXS Q4 Deep Dive: Program Ramps and Market Share Gains Drive Guidance Upgrade

Electronic manufacturing services company Plexus (NASDAQ:PLXS) met Wall Streets revenue expectations in Q4 CY2025, with sales up 9.6% year on year to $1.07 billion. The company expects next quarter’s revenue to be around $1.13 billion, coming in 4.1% above analysts’ estimates. Its non-GAAP profit of $1.78 per share was 2.7% above analysts’ consensus estimates.

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StockStory’s Take

Plexus delivered a quarter that met Wall Street’s revenue expectations and exceeded consensus for non-GAAP earnings per share, prompting a positive market reaction. Management attributed the performance to strong program ramps across Healthcare/Life Sciences and Aerospace and Defense sectors, as well as improved demand in semiconductors and energy markets. CEO Todd Kelsey highlighted, "Our consistent strategy and focus on delivering customer success continues to enable share gains and is facilitating our leadership in growth markets." The company also benefited from operational improvements in its global facilities, helping offset investment costs tied to new capacity.

Looking forward, management’s upgraded outlook is driven by ongoing market share gains, robust new business wins, and visible demand momentum in key verticals such as Aerospace and Defense, Healthcare, and Industrial. The company believes its pipeline of qualified manufacturing and engineering opportunities supports the potential to meet or exceed its previously stated growth targets. CFO Patrick Jermain cautioned that margin expansion will depend on balancing investments in automation and talent with ongoing productivity improvements, stating, "We expect to leverage this improved revenue outlook and our ongoing investments in operational efficiency to drive significant operating profit expansion and robust free cash flow."

Key Insights from Management’s Remarks

Management credited the quarter’s growth to large program wins and end-market improvements, particularly in Aerospace and Defense, Healthcare, and semiconductors.

• Aerospace and Defense momentum: The company achieved a record quarterly performance in Aerospace and Defense, securing $220 million in new manufacturing program wins. Management noted these were driven by expanded relationships with both existing and new customers, particularly in commercial space and security detection technologies.
• Healthcare/Life Sciences expansion: Sequential revenue growth in Healthcare/Life Sciences was attributed to successful program ramps and new product introductions, including next-generation imaging solutions. Management highlighted share gains with existing medical equipment manufacturers in new regions.
• Semicap and industrial demand uptick: Improved demand in semiconductor capital equipment (semicap) and industrial equipment sectors contributed to growth. CEO Todd Kelsey described early signs of recovery in semicap as “bullish,” with program ramps expected to translate into near-term revenue.
• Operational efficiency investments: The company continued to invest in automation and AI-driven processes, such as warehouse robotics and machine learning for production optimization. These initiatives are expected to deliver both margin improvement and capital spending efficiencies.
• Capacity and capital allocation: Plexus emphasized that current facility capacity can support substantial revenue growth, with capital investment shifting towards automation rather than new plant construction. The company maintained a net cash position and reaffirmed its free cash flow targets despite higher working capital needs.

Drivers of Future Performance

Plexus expects revenue and operating profit momentum to continue, fueled by sustained program ramps, market share gains, and investments in operational efficiency.

• Robust program pipeline: Management cited a diverse and growing funnel of manufacturing and engineering opportunities, particularly in Aerospace and Defense and Healthcare/Life Sciences. These sectors are expected to drive the majority of incremental revenue in upcoming quarters.
• Automation and AI adoption: The rollout of robotics and AI-powered tools across global sites is aimed at improving asset utilization, reducing labor costs, and accelerating the quoting process. Management believes these initiatives will help sustain margin expansion even as the company invests in talent and technology.
• Supply chain and working capital risks: Management acknowledged that tightening lead times for certain components, especially semiconductors and printed circuit boards, could impact program ramps and working capital needs. However, proactive inventory management and strong customer partnerships are being used to mitigate these risks.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be watching (1) the pace and breadth of program ramps in Aerospace and Defense and Healthcare/Life Sciences, (2) the impact of automation and AI initiatives on productivity and operating margins, and (3) the company’s ability to navigate supply chain pressures and working capital demands. Progress in these areas will signal whether Plexus can achieve its upgraded growth and profitability targets.

Plexus currently trades at $184.14, up from $180.85 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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