AVT: Cyclical Stabilization And Share Buybacks Will Support Future Performance

Analysts have nudged their price target on Avnet up by $1 to $55 as they factor in recent quarterly upside and early signs of cyclical stabilization, while still cautioning that margin pressure and limited AI exposure temper the recovery outlook.

Analyst Commentary

Bullish Takeaways

• Bullish analysts highlight that the recent Q3 upside validates Avnet's ability to execute in a challenging demand backdrop, supporting the modest price target increase.
• They point to early signs of cyclical stabilization across end markets as a foundation for more predictable revenue trends, which could eventually justify multiple expansion.
• Management's commentary on broader macro indicators, including purchasing activity and order patterns, is seen as supportive of a bottoming process rather than a deeper downturn.
• Limited AI exposure is viewed as a partial risk mitigant in the near term, reducing volatility tied to a still nascent and highly competitive segment.

Bearish Takeaways

• Bearish analysts stress that revenue outperformance is not flowing through to profitability, with geographic mix continuing to weigh on margins and capping earnings leverage.
• The absence of a clear, broad-based cyclical recovery keeps conviction restrained, limiting scope for a more aggressive rerating of the shares.
• Under indexed participation in AI linked demand is seen as a strategic gap that could leave Avnet lagging higher growth peers over the medium term.
• Until purchasing managers' indices and other macro indicators more decisively recover, bears expect valuation to remain range bound, with execution gains offset by structural headwinds.

What's in the News

• Completed a major share repurchase program, buying back a total of 18.5 million shares, or about 20.6% of shares outstanding, for $886 million as of late September 2025 (company buyback update).
• Repurchased 2.65 million shares, or roughly 3.2% of shares outstanding, for $138.3 million between June 29 and September 27, 2025, under the existing authorization (company buyback update).
• Issued guidance for the second quarter of fiscal 2026, projecting sales of $5.85 billion to $6.15 billion and GAAP diluted EPS of $0.74 to $0.92 (company guidance).
• Appointed PricewaterhouseCoopers LLP as new independent auditor, effectively dismissing KPMG LLP after audit committee review on September 30, 2025 (auditor change filing).
• Joined Sensirion Holding AG's distribution network, expanding access to Sensirion's sensor technologies through Avnet's global design to delivery platform (client announcement).

Valuation Changes

• Fair Value: Unchanged at $53.00 per share, indicating no revision to the intrinsic value estimate.
• Discount Rate: Fallen slightly from 10.73% to 10.63%, reflecting a marginally lower required return.
• Revenue Growth: Effectively unchanged at about 5.50% annually, signaling a steady top line outlook.
• Net Profit Margin: Essentially flat at about 2.59%, pointing to a stable profitability profile.
• Future P/E: Edged down slightly from 7.04x to 7.02x, implying a modestly lower valuation multiple applied to forward earnings.