Bullish Article Highlights Celestica's Growth, But DeepValue Report Warns of Valuation Overhang

What happened

A Seeking Alpha article published on January 19, 2026, advocates buying Celestica ahead of Q4 earnings, citing its transition from a traditional EMS provider to an ODM leader with high-value hyperscale demand and a 1.6T networking upgrade cycle as key growth drivers. The article references management's 2026 adjusted EPS projection of $8.20, representing a 39% year-over-year increase driven by favorable product mix and margin expansion. However, the latest DeepValue master report maintains a 'STRONG SELL' rating, arguing that Celestica's stock price of $319.72 trades at ~53x trailing EPS and ~39x 2026 EPS guidance, embedding unsustainable growth expectations for a cyclical EMS/ODM business with extreme customer concentration. The report highlights risks such as competitive pressures from peers like Jabil, potential margin compression as AI capacity constraints ease, and the likelihood of multiple compression toward mid-20s P/E levels if execution falters. This divergence underscores the tension between near-term bullish sentiment and fundamental valuation concerns that could lead to significant downside if growth targets are missed.

Implication

The bullish article emphasizes Celestica's growth potential from AI and networking cycles, but overlooks the fact that its high P/E multiple already prices in perfection, leaving no margin of safety. Celestica's heavy reliance on a few hyperscaler customers exposes it to revenue volatility and pricing pressures, as seen in past program transitions that caused significant declines. Any deviation from the aggressive 2026 EPS target of $8.20 could trigger sharp multiple compression, with the DeepValue report's base case implying a value of $255, well below the current price. Competitive threats are mounting, with peers like Jabil expanding AI capacity, which may erode Celestica's margin advantages and market share over the medium term. Therefore, while operational momentum may persist, the risk-reward skews negatively, favoring profit-taking for existing holders and caution for new investors until a material pullback restores valuation cushion.

Thesis delta

The Seeking Alpha article does not materially shift the bearish thesis from the DeepValue report, as it fails to address the core valuation overhang and concentration risks that underpin the 'STRONG SELL' rating. Instead, the article exemplifies the crowded, momentum-driven sentiment that the report identifies as a warning sign for potential climax top dynamics if growth expectations falter. Investors should remain aligned with the report's caution, as the stock's premium pricing offers limited upside even in bull scenarios while exposing holders to significant downside in base or bear cases.