Needham & Company on Electronic Manufacturing Services (EMS): Conditions Remain Solid, But Stocks Could Pull Back
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Rating Summary:
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Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
15 Buy, 4 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Needham & Company on Electronic Manufacturing Services (EMS): Conditions Remain Solid, But Stocks Could Pull Back
Analyst, Sean K.F. Hannan, said, "Considering the market strength through 1Q and recent signs that we have seen of a potential pause or pullback, this note explores the topic of “sell on the news” that appears to be emerging as the re-hashed strategy du jour entering this earnings season. In general, we are not expecting a particularly eventful group of reports. We expect results for most of our names to be in line with prior 1Q guidance while top-line guidance for June could be in line to only modestly softer than some bullish Street expectations. We remain focused on the long term and consider our EMS names to be attractive as valuations still look reasonable and industry growth continues. Further, we believe the outsourcing environment remains strong and that 2H12 outlooks/forecasts from OEM customers continue to look encouraging. Our top stock pick in the group remains Jabil (NYSE: JBL)."
"On an absolute basis versus the indices, performance for all our covered EMS names has been particularly strong, and up by 20%+. If one were to consider a quasi-academic exercise and look at Jensen’s alpha (considering the beta of each stock on an individual basis): Benchmark Electronics (NYSE: BHE), Flextronics (Nasdaq: FLEX), JBL & Plexus (Nasdaq: PLXS) outperformed the S&P while Sanmina-SCI (Nasdaq: SANM) underperformed."
Analyst, Sean K.F. Hannan, said, "Considering the market strength through 1Q and recent signs that we have seen of a potential pause or pullback, this note explores the topic of “sell on the news” that appears to be emerging as the re-hashed strategy du jour entering this earnings season. In general, we are not expecting a particularly eventful group of reports. We expect results for most of our names to be in line with prior 1Q guidance while top-line guidance for June could be in line to only modestly softer than some bullish Street expectations. We remain focused on the long term and consider our EMS names to be attractive as valuations still look reasonable and industry growth continues. Further, we believe the outsourcing environment remains strong and that 2H12 outlooks/forecasts from OEM customers continue to look encouraging. Our top stock pick in the group remains Jabil (NYSE: JBL)."
"On an absolute basis versus the indices, performance for all our covered EMS names has been particularly strong, and up by 20%+. If one were to consider a quasi-academic exercise and look at Jensen’s alpha (considering the beta of each stock on an individual basis): Benchmark Electronics (NYSE: BHE), Flextronics (Nasdaq: FLEX), JBL & Plexus (Nasdaq: PLXS) outperformed the S&P while Sanmina-SCI (Nasdaq: SANM) underperformed."
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