$CLS

Canada and the US imposed tariffs on each other's exports, including electronics, with no expiry date. Canadian electronics exports are heavily dependent on the US, making the sector vulnerable. Celestica and other EMS providers may relocate production to mitigate costs. Provincial and federal governments are offering support programs. Investors should watch Q3 earnings for affected companies and the impact of Canada's retaliatory tariffs on September 8.

Celestica (CLS) shares fell 12.4% since its last earnings report, despite beating Q2 2026 estimates with $2.54 EPS and $4.70B revenue, driven by strong CCS demand. The company raised its 2026 outlook, projecting $20.5B revenue and $11.30 EPS. Management expects revenue growth to accelerate in 2027.

UBS upgraded Celestica (CLS:CA) to 'Buy' with a C$595 price target, citing strong AI infrastructure demand and recent financial performance. Q2 2026 revenue was US$4.70B, up 62% YoY, with EPS at US$2.54. The company raised full-year guidance to US$20.5B revenue and US$11.30 EPS, with 8.4% operating margin and US$600M free cash flow expected. Growth is projected to accelerate in 2027, but high expectations pose execution risks.

Analysts made several ratings changes: UBS upgraded Celestica to Buy with a $430 target, citing AI-driven demand. Citi initiated Reformation as Buy with a $20 target. Morgan Stanley initiated Jersey Mike's and ArcelorMittal as Overweight. Baird upgraded Darden to Outperform and downgraded Chipotle to Neutral. Other notable moves include upgrades for Suzano, Ionic Digital, and Fortune Brands, while Canada Goose was downgraded.

Analysts upgraded four companies: Baird raised Darden (DRI) to Outperform with a $250 target, Wolfe upgraded Janux (JANX) to Outperform with a $23 target, UBS upgraded Celestica (CLS) to Buy with a $430 target, and Wolfe upgraded PulteGroup (PHM) to Outperform with a $129 target. All companies closed at or near their respective targets on Friday.

Flex Ltd. and Celestica Inc. are benefiting from AI infrastructure demand. Flex reported Q1 2027 revenue growth of 21% YoY to $7.9B, with CPI revenue up 35%. Celestica saw Q2 2026 revenue rise 62% YoY to $4.7B, driven by AI/ML compute and networking programs. Both companies raised revenue guidance. Flex faces near-term investment pressures, while Celestica deals with supply-chain constraints.

The TSX Composite Index fell 0.8% to 36,368 on Tuesday, led by declines in mining and financial sectors due to global bond yields and Middle East tensions. Major banks and miners dropped, while energy stocks rose on higher oil prices. NexGen Energy discussed a potential equity stake with BHP in its Rook I project.

Celestica Inc said it will hire more than 2,100 employees in Malaysia, adding roles in production and design engineering, to expand manufacturing and technology capabilities. The company attributed the move to rising global demand for AI infrastructure and cloud computing, and said Malaysia is key to its growth strategy.

Bank of America cited a July selloff in AI stocks and named 16 “oversold” picks it rates Buy and Top Pick, each down at least 20% from 52-week highs. Examples include Oracle (ORCL) down 55% and CoreWeave (CRWV) down 31%. BofA also listed 12-month price targets, including MU $1,550 (+63%) and ORCL $240 (+54%).

Bank of America said its AI-infrastructure stock screen found 16 Buy-rated names trading more than 20% below 52-week highs, with positive three-month earnings revisions. Micron (MU) had the largest implied upside versus BofA’s $1,550 target, about 63%. BofA cited server DRAM pricing growth and tight supply, plus long-term 2028 EPS estimate near $150.