Plexus (PLXS) Valuation in Focus After Rare-Earth Export Controls Heighten US-China Trade Tensions

Plexus (PLXS) shares reacted as investors digested new tensions between the US and China, following China’s introduction of export limits on rare-earth minerals. These minerals are central to technology manufacturing and global supply chains.

See our latest analysis for Plexus.

After a rocky week shaped by escalating US-China trade tensions, Plexus’ share price found its footing, closing at $139.94 after a 1.36% gain over the past day. While the share price has seen some ups and downs, down nearly 10% year-to-date, it is worth noting that total shareholder return for the past year stands at a modest 2.97%. A robust 52.59% three-year return suggests long-term momentum is still intact. Recent events seem to be fueling shifts in risk perception, rather than derailing the underlying growth story.

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With these external pressures shaping sentiment and a modest long-term return profile, investors now face a crucial question: Is Plexus trading at a bargain, or has the market already accounted for all of its potential growth?

Most Popular Narrative: 9.5% Undervalued

Compared to the latest closing price of $139.94, the most widely followed narrative pegs Plexus’ fair value at $154.6. This sets expectations for potential upside if projections materialize. The valuation places the target above the current market price, increasing expectations for the company's future performance and highlighting the importance of strong execution.

The company's increasing success in winning programs in high-margin, complex sectors such as healthcare/life sciences, aerospace, and defense (including a strong defense pipeline in Europe and record sector wins) is shifting the revenue mix toward segments with higher pricing power and more stable, long-term contracts. This could positively impact both revenue consistency and net margin expansion.

Read the complete narrative.

Curious what’s fueling this bullish call? The most popular narrative is betting on profit and revenue gains beyond what the market expects, hinging on a handful of critical assumptions. Want to uncover the growth benchmarks and financial projections baked into this valuation? See how this price target gets justified: the full breakdown may surprise you.

Result: Fair Value of $154.6 (UNDERVALUED)

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

However, ongoing trade uncertainties and customer-specific demand slowdowns could quickly disrupt momentum and challenge the case for sustained earnings growth at Plexus.

Find out about the key risks to this Plexus narrative.

Another View: What Does the SWS DCF Model Show?

While analysts' price targets suggest Plexus could be undervalued, the SWS DCF model paints a different picture. According to this approach, Plexus may actually be trading above its estimated fair value. This contrast raises the question of whether optimism about future growth is already reflected in today’s price or if longer-term risks are underestimated.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Plexus for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Plexus Narrative

If you see things differently, or want to dive deeper on your own terms, you can shape your own story about Plexus in just a few minutes. Do it your way

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

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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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