Analyst Views Mixed as Flex Price Target Rises on Data Center and Market Strength

Flex's analyst price target has been revised upward from $59 to $60.43. Analysts cited stronger-than-expected data center growth and robust end-market demand as key factors behind the increased valuation.

Analyst Commentary

Recent updates from Wall Street reflect ongoing debate regarding Flex's competitive position and industry momentum. The following summarizes the key optimistic and cautious perspectives raised in Street research:

Bullish Takeaways

Bullish analysts have increased their price targets for Flex, citing strong execution and upside momentum from data center and cloud-related business. This is reflected in multiple valuation upgrades.
Flex is consistently outperforming previously guided long-term revenue growth targets in its data center segment, which supports confidence in sustainable, higher growth trajectories.
Positive commentary around Flex’s global risk mitigation and operational flexibility highlights the company's ability to navigate tariffs and macroeconomic headwinds effectively.
Revised U.S. auto forecasts point to healthy end-market demand, providing additional visibility to Flex’s diversified revenue streams and underlying business fundamentals.

Bearish Takeaways

Cautious analysts flag broader sector weakness among electronic manufacturing services companies. They note that industry peers have reported mixed results, contributing to near-term volatility.
While the Amazon warrant agreement supports an ongoing partnership, some view it as unlikely to generate meaningful incremental revenue in the near term and possibly temper expectations for immediate upside.
Recent stock pressure in Flex and competitors following key industry reports suggests sensitivity to shifts in AI and cloud-related narratives. This may drive short-term revaluation risks.
Certain industry forecasts have seen reduced assumptions regarding the mix of battery electric vehicles, which could potentially impact longer-term growth projections in automotive-related business lines.

What's in the News

Flex unveiled the industry's first globally manufactured, fully integrated data center platform for AI and HPC. This platform enables up to 30% faster deployments and introduces several innovative products, including 1MW liquid-cooled racks and capacitive energy storage. (Key Developments)
Flex launched a new Modular Rack-Level Cooling Distribution Unit that provides scalable, energy-efficient liquid cooling solutions for rapidly expanding AI and hyperscale data centers. (Key Developments)
Flex partnered with AppFolio to offer flexible rent payment options to residents nationwide. This partnership supports over $16 billion in annual rent payments and addresses the growing demand for payment flexibility. (Key Developments)
A Flex facility in Mukachevo, Ukraine, was damaged during a missile strike. The incident resulted in injuries and the activation of the company's Business Continuity Plan. The impacted site represents about 1% of company revenue. (Key Developments)
Flex completed a $246.97 million share buyback tranche, bringing total repurchases to $912.56 million under its current authorization. (Key Developments)

Valuation Changes

Consensus Analyst Price Target has risen slightly, moving from $59 to $60.43.
Discount Rate has declined marginally, from 8.77% to 8.74%.
Revenue Growth assumptions have increased modestly, from 3.79% to 3.82%.
Net Profit Margin projections have edged down slightly, from 4.60% to 4.60%.
Future P/E has increased, moving from 19.24x to 19.68x.

Accelerating demand for AI infrastructure and strategic investments in high-margin verticals are shifting revenue mix toward greater stability and long-term earnings growth.
Regionalized manufacturing, automation, and integrated solutions are differentiating Flex, enabling supply chain resilience and improved margins versus competitors.
Heavy reliance on a few major clients and thin margins make Flex vulnerable to client loss, industry shifts, and the growing trend of customer in-house manufacturing.

Catalysts

About Flex

Provides technology innovation, supply chain, and manufacturing solutions to data center, communications, enterprise, consumer, automotive, industrial, healthcare, industrial, and power industries.What are the underlying business or industry changes driving this perspective?

The ongoing surge in demand for data center and AI infrastructure-requiring integrated power, cooling, and advanced IT hardware-positions Flex for sustained, outsized revenue growth, as evidenced by the 35% forecasted annual increase in its data center segment, supporting both topline expansion and higher portfolio margins.
Flex's global manufacturing footprint, especially its ability to regionalize and rapidly scale production across North America and Europe, aligns with accelerating customer efforts to de-risk and diversify supply chains. This strategic positioning is likely to drive incremental customer wins and increase future revenues.
The company's deployment of AI-enabled systems and advanced automation across its facilities is delivering meaningful productivity gains, which should support ongoing operating margin expansion and improve long-term earnings potential.
Continued investments in higher-growth, higher-margin verticals such as healthcare, automotive (especially as EV and electronic content grows), and networking-alongside strategic acquisitions like the new Poland facility-are shifting Flex's revenue mix toward greater stability and margin accretion, likely supporting higher future ROIC and earnings growth.
Flex's transition from traditional contract manufacturing to providing integrated, IP-driven solutions (especially in cloud/power integration and AI infrastructure) will deepen customer relationships, increase differentiation versus competitors, and unlock new higher-value revenue streams, enhancing both gross margins and earnings long-term.

Flex Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Flex's revenue will grow by 3.7% annually over the next 3 years.
Analysts assume that profit margins will increase from 3.4% today to 4.6% in 3 years time.
Analysts expect earnings to reach $1.3 billion (and earnings per share of $3.54) by about September 2028, up from $891.0 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.8x on those 2028 earnings, down from 23.7x today. This future PE is lower than the current PE for the US Electronic industry at 23.9x.
Analysts expect the number of shares outstanding to decline by 3.21% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.71%, as per the Simply Wall St company report.

Flex Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Ongoing customer concentration risk is highlighted by the company's reliance on a small set of hyperscaler and colo data center clients, meaning the loss or insourcing by any of these major customers (as hinted at in Amazon's move to internally designed cooling solutions) could significantly impact Flex's future revenue stability and earnings visibility.
Structural thin operating margins across Flex's business-despite current improvements-leave little buffer to absorb unexpected cost pressures, industry price competition, or commoditization of manufacturing services, thereby risking long-term net margin sustainability and overall profitability.
Continued macro-related weakness and cyclicality in key end markets such as automotive, core industrial, and consumer-facing products expose Flex to volatile demand patterns-even as current guidance remains unchanged-which could undermine future revenue growth and earnings if cyclical downturns persist or intensify.
Flex's positive commentary on automation and AI-driven manufacturing also indicates the necessity for ongoing substantial capital investment to maintain competitiveness; however, as automation technology becomes more widespread, it may erode Flex's traditional labor-cost advantages, pressure margins, and require further investments to avoid obsolescence, potentially impacting long-term EBIT margins and capital returns.
The increasing trend of customers (hyperscalers and otherwise) evaluating in-house manufacturing for critical components such as power and cooling (as flagged by recent market moves) signals a risk of vertical integration by major OEMs, which could reduce Flex's total addressable market and create topline headwinds that affect future revenue and growth prospects.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $57.857 for Flex based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $65.0, and the most bearish reporting a price target of just $50.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $29.1 billion, earnings will come to $1.3 billion, and it would be trading on a PE ratio of 18.8x, assuming you use a discount rate of 8.7%.
Given the current share price of $56.2, the analyst price target of $57.86 is 2.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analyst Views Mixed as Flex Price Target Rises on Data Center and Market Strength