Sanmina-SCI Focused On Driving Operating Margin Expansion, Goldman Sachs Reports

During a management meeting with Sanmina-SCI Corporation SANM, Goldman Sachs reports that the company was focused on driving operating margin expansion. “Sanmina is targeting long term operating margin of 6%, up from 4.1% today,” Goldman Sachs writes. “Five drivers of margin expansion include: improved yields/execution in manufacturing; business mix (growth in industrial/medical/defense); SG&A leverage (keeping expenses relatively flat even if the quarterly revenue run rate was 15% higher); leveraging its components business (1/3 internal vs. 2/3 third party today, moving toward 50/50 over time); and improving capacity utilization from the current level of 70-75%.” Goldman Sachs added that there is no change to its Neutral rating on shares of Sanmina-SCI Corporation, which currently trades at $10.96.