Should You Bet on CLS Stock Amid Rising Estimate Revision Trend?

Earnings estimates for Celestica Inc. CLS for 2026 and 2027 have moved up 7.5% and 7.1% to $8.83 and $12.61 per share, respectively, over the past 60 days. The positive estimate revision depicts bullish sentiments about the stock’s growth potential.

What Fuels CLS Growth?

Celestia has been benefiting from the ongoing generative AI boom, thanks to the solid demand trends for AI/ML compute and networking products from hyperscale customers. AI investments are driving demand for Celestica’s enterprise-level data communications and information processing infrastructure products, such as routers, switches, data center interconnects, edge solutions and servers, and storage-related products. 

To further capitalize on this trend, Celestica is steadily expanding its offering through innovation and strategic collaborations. The company has launched its latest storage platform, the SD6300 ultra-dense storage expansion system, to cater to the exponential AI data growth across traditional enterprise and hyperscale data centers. With a compact footprint of only 1125 mm (including cable management assembly), the SD6300 maximizes utilization of existing data center floor space as it can be accommodated within standard 1200 mm racks.

The company also introduced two new 1.6TbE data center switches, the DS6000 and DS6001, to support high-bandwidth, AI/ML data center applications. While the DS6000 is a 3RU, 64-port x 1.6TbE data center switch for traditional air-cooled data center installations, the DS6001 is a 2OU, 64-port x 1.6TbE switch offering a hybrid cooled solution based on the 21-inch OCP ORv3 rack. Together, the switches double the switching capacity of Celestica’s current offerings.

CLS Rides on Product Diversification, R&D Focus

Celestica’s focus on product diversification and increasing its presence in high-value markets is positive. Its strong research and development foundations allow it to produce high-volume electronic products and highly complex technology infrastructure products for a wide range of industries. The company continuously enhances its manufacturing, engineering, design, quality and supply-chain capabilities while developing trusted relationships with leading customers. This strategy has augmented its market penetration in each of the markets it serves. 

Its customer base includes several leading manufacturers from multiple industries, including communication, healthcare, aerospace and defense, energy, semiconductor and various cloud-based and other service providers. Such a diverse customer base enhances business resilience by reducing dependence on a single industry and minimizing the effects on financial results from an economic downturn in one specific sector.

Price Performance

Celestica has surged 209.2% over the past year compared with the industry’s growth of 115.8%. It has also outperformed peers like Flex Ltd. FLEX and Jabil Inc. JBL. Flex has gained 81.8%, and Jabil is up 86.9% over this period.  

One-Year CLS Stock Price Performance

2026 Guidance Raised

Backed by robust demand for networking products and growing AI-driven data center investments across industries, Celestica presented a bullish outlook for 2026. The company currently anticipates full-year revenues to be approximately $17 billion, up from the previous projection of $16 billion. Non-GAAP operating margin is expected to be 7.8%. Non-GAAP adjusted earnings are expected to be $8.75 per share, up from the previous view of $8.20. Non-GAAP free cash flow is estimated to be $500 million.  

End Note

As the company scales up production volumes and costs go down, the adoption of Celestica’s products is likely to soar across several industries, including automotive, data center and high-performance computing, telecommunications, medical, aerospace and defense. 

The firm delivered a trailing four-quarter average earnings surprise of 9.1%. Celestia currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Riding on a robust earnings surprise history and favorable Zacks Rank, it appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.

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This article originally published on Zacks Investment Research (zacks.com).

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