By Mara Der Hovanesian
There's no sign the tech storm will pass anytime soon. That's grim news for electronics outfits such as Celestica (CLS), Flextronics International (FLEX), and Solectron (SLR): Not until the computer, cell-phone, and telecom makers rev up production and outsourcing will they see a rebound. Right now, high tech farms out only 15% of its manufacturing. Bear Stearns reckons $26 billion from such work could be generated in the next year if things pick up.
Outsourcers have been restructuring, says Todd Coupland of CIBC World Markets, and a small uptick in orders could boost their profits. "It's going to be in small steps," he thinks. If investors are willing to take a giant leap, Coupland's choice is Celestica, run by former IBM execs. First-quarter earnings were 26 cents a share, down from 31 cents last year, and Coupland, who owns about 5,000 shares, dropped his yearly forecast from $1.45 to $1.20. But his price target of 56 is bullish, with the stock at 31. Analyst Chris Whitmore of Deutsche Bank has a similar take. "Celestica is in one of the best positions for the long term." Gene G. Marcial is on vacation.