UBS Upgrades $CLS to Buy from Neutral, Raises PT to $430 from $410 Analyst comments: "Strong artificial intelligence-driven demand for Ethernet switching and artificial intelligence/machine learning compute, together with a 1.6T rack-scale solution for OpenAI, should accelerate revenue growth and, more importantly, earnings per share growth in CY27. Therefore, we conservatively forecast a roughly 50% two-year earnings per share compound annual growth rate to CY28 earnings per share of $24.72 from $10.83 in CY26. Shares trading at ~12x our CY28 earnings per share forecast suggests the market expects less than half the growth we model. Even without multiple expansion from the current ~20x next twelve-month price-to-earnings ratio, we see favorable risk/reward. Key upgrade drivers include: 1. Scale-out and scale-up (AMD Helios) switch demand from Google, Amazon, and Meta should drive a ~40% three-year compound annual growth rate in Communications revenue. 2. Our supply chain checks indicate custom ASIC solutions by hyperscalers like Google and OpenAI should drive Enterprise revenue growth of ~127% in CY27 and a ~52% compound annual growth rate over the next three years. 3. Program mix likely caps gross margin in the mid-11% range in CY27 and CY28, but operating leverage conservatively lifts our operating margin forecast to 8.83% in CY28 from 8.35% in CY26." Analyst: David Vogt

UBS Upgrades $CLS to Buy from Neutral, Raises PT to $430 from $410 Analyst comments: "Strong artificial intelligence-driven demand for Ethernet switching and artificial intelligence/machine learning compute, together with a 1.6T rack-scale solution for OpenAI, should accelerate revenue growth and, more importantly, earnings per share growth in CY27. Therefore, we conservatively forecast a roughly 50% two-year earnings per share compound annual growth rate to CY28 earnings per share of $24.72 from $10.83 in CY26. Shares trading at ~12x our CY28 earnings per share forecast suggests the market expects less than half the growth we model. Even without multiple expansion from the current ~20x next twelve-month price-to-earnings ratio, we see favorable risk/reward. Key upgrade drivers include: 1. Scale-out and scale-up (AMD Helios) switch demand from Google, Amazon, and Meta should drive a ~40% three-year compound annual growth rate in Communications revenue. 2. Our supply chain checks indicate custom ASIC solutions by hyperscalers like Google and OpenAI should drive Enterprise revenue growth of ~127% in CY27 and a ~52% compound annual growth rate over the next three years. 3. Program mix likely caps gross margin in the mid-11% range in CY27 and CY28, but operating leverage conservatively lifts our operating margin forecast to 8.83% in CY28 from 8.35% in CY26." Analyst: David Vogt

Source:https://x.com/epictrades1/status/2091855004801888675