Flextronics (FLEX) on 'Catalyst Watch' at Citi

Flextronics (NASDAQ: FLEX) was placed on 'Catalyst Watch' at Citi in conjunction with their note entitled Fashion Forward with Technologies and ahead of May 10th investor day in New York.

Analyst Jim Suva commented, "We expect Flex to highlight sales/EPS opportunities from Nike relationship during the event. Recall, Nike announced strategic partnership with Flex to automate shoe manufacturing process for cost reduction, mass customization and supply chain optimization in October 2015. We believe the partnership should drive sustainable growth for Flex given the low EMS penetration rate in footwear manufacturing (below 1% currently) and high operating margins (likely mid-teens vs. traditional EMS business at 3-5%). We expect Nike will be a top 10 customer for Flex by the end of FY19 and could contribute annualized sales/EPS at $1bn (or 4% of sales) /$0.29 (or 16% of EPS) in FY19. Consensus appears conservative on Flex’s margin expansion."

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