SANM: Full Rack Assembly Expansion Will Drive Momentum Amid Macro Uncertainty

Analysts have raised their price target on Sanmina from $150 to $180, citing stronger fiscal Q4 results, a recovering communications end market, and expanded capabilities. However, they note ongoing integration challenges and macroeconomic uncertainty.

Analyst Commentary

Analysts provided a balanced perspective on Sanmina's outlook, highlighting several key factors driving both optimism and caution regarding the company's prospects and valuation following recent results and industry developments.

Bullish Takeaways

• Price targets have been raised in response to Sanmina's strong fiscal Q4 performance, reflecting improved financial execution and resilience.
• Growth prospects are supported by the recovering communications end market, which appears to be emerging from an inventory correction and fueling renewed order momentum.
• Expanded capabilities, including full rack assembly through ZT Systems, are seen as strategic advantages that should facilitate new opportunities and strengthen Sanmina's positioning with key clients such as AMD.
• Sanmina's status as a preferred partner for major technology collaborations, including recent AI datacenter initiatives, is viewed as a catalyst for long-term revenue growth and margin expansion.

Bearish Takeaways

• Ongoing integration of the ZT Systems business introduces execution risk, especially as Sanmina aims to scale production quickly for customers like AMD.
• The overall macroeconomic environment remains uncertain. This adds another layer of unpredictability to Sanmina's near-term performance and end market demand.
• Dependence on high-profile partnerships, such as with AMD and OpenAI, brings inherent risk given the potential for shifts in procurement strategies or competition from alternative manufacturing partners.
• While improvements are positive, it remains difficult to precisely quantify the bottom-line impact of new initiatives and partnerships, making it challenging for analysts to fully price in future growth.

What's in the News

• Sanmina Corporation issued new earnings guidance for the first quarter ending December 27, 2025, projecting revenue between $2.9 billion and $3.2 billion (Company Guidance).

Valuation Changes

• The Fair Value Estimate remains unchanged at $190, indicating continued alignment with prior assessments of intrinsic worth.
• The Discount Rate has risen slightly from 8.29% to 8.47%, reflecting a modest increase in perceived risk or cost of capital.
• The Revenue Growth Projection is stable at approximately 37.29%, suggesting unchanged expectations for top-line expansion.
• The Net Profit Margin forecast remains at 3.17%, indicating no significant change in profitability assumptions.
• The Future P/E Ratio has increased from 18.81x to 20.00x, highlighting a higher valuation multiple being applied to projected earnings.