PLXS: Coca-Cola “Freestyle” Ramp Presents Sizable Opportunity

Analysts at Citigroup reiterate their "hold" rating on Plexus Corp PLXS. The target price for PLXS is set to $49. According to Citigroup, the key positives from the meeting were, “1) Management reiterated Q3 guidance. 2) Product ramp of the Coca-Cola “Freestyle” soda machine appears on track and management projected the manufacturing line could produce 200 units per day. 3) PLXS was awarded the GS2 contact for a behind-the-counter “Freestyle” model and has begun installing a GS2 line. 4) Product demonstration of the “Freestyle” machine suggests PLXS has addressed software glitches and minor design issues. 5) Seeing strong growth in Industrials & Commercial end-market segments, particularly in renewables.” The negative point noted by the analysts was, “Management mentioned weakness in European markets, specifically Wireline & Wireless, in recent weeks noting telco equipment is typically back-end loaded in the quarter. One customer in particular reduced forecasts as they work through inventories.” “While we believe the Coca-Cola Freestyle ramp presents a sizable opportunity, we would like more clarity around timeline, addressable market and customer penetration… We would become more positive on the shares at a lower price, all being equal, if the company were to garner better operating leverage than expected, or if new business wins outstrip our outlook,” Citigroup adds. More Analyst Ratings here