Evaluating Flex (FLEX) After Raymond James Upgrade On Cloud And AI Growth Potential

A Raymond James upgrade has put Flex (FLEX) back on investors’ radar after the firm cited its role in cloud and AI infrastructure and highlighted differentiated power solutions for hyperscale data centers and higher margin power operations.

See our latest analysis for Flex.

Flex’s recent pullback, with a 1 day share price return of 3.71% decline to US$63.04, comes after a steadier 30 day share price return of 4.34% and a much stronger 1 year total shareholder return of 51.36%. This suggests longer term momentum remains intact despite short term volatility around the Raymond James upgrade and the focus on its cloud and AI infrastructure exposure.

If Flex’s AI and data center story has your attention, it could be a good moment to scan other high growth tech and AI stocks that are also tied to these themes.

Flex’s shares now sit at a modest 4% intrinsic discount and about a 17% gap to analyst targets. The stock has already delivered a 51.36% 1-year return, so is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 14.5% Undervalued

Flex's most followed narrative points to a fair value of about $73.70 versus the last close at $63.04, putting the current discount clearly in focus.

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.

Read the complete narrative.

Curious what sits behind that fair value gap? The narrative leans heavily on earnings expansion, margin uplift, and a re rated earnings multiple tied to AI centric revenue.

Result: Fair Value of $73.70 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside story still hinges on concentrated hyperscaler clients and thin margins, so any insourcing or pricing pressure could quickly challenge those fair value assumptions.

Find out about the key risks to this Flex narrative.

Build Your Own Flex Narrative

If you look at the numbers and reach a different conclusion, or simply prefer to test your own view, you can build a custom thesis in just a few minutes with Do it your way.

A great starting point for your Flex research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Flex has sharpened your thinking, do not stop there. Use the Simply Wall St Screener to quickly spot fresh angles you might otherwise miss.

• Scan for potential value opportunities by checking out these 868 undervalued stocks based on cash flows that align with your return and risk preferences.
• Zero in on AI themed opportunities by reviewing these 25 AI penny stocks that are connected to data, automation, and machine learning trends.
• Broaden your income watchlist by assessing these 14 dividend stocks with yields > 3% that may complement or contrast with a growth focused portfolio.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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