NEW YORK—Flextronics International Ltd. is poised to gain from improving fundamentals and the integration of an acquisition, one analyst said, following the company's upbeat outlook.
After Tuesday's market close, Flextronics, which provides services for electronics manufacturers, forecast adjusted fiscal first-quarter profit mostly above Wall Street expectations, lifting shares in aftermarket trading.
Flextronics also swung to a fiscal fourth-quarter loss because of a hefty restructuring charge.
Cowen & Co. analyst Louis Miscioscia offered a positive industry outlook, saying that trends are stabilizing.
Miscioscia kept an "Outperform" rating on the stock and said the shares may have a "decent rally" going forward.
Meanwhile, Citi Investment Research analyst Jim Suva said the ongoing integration of Solectron Corp. lifted earnings per share. Last June, Flextronics revealed plans to buy Solectron for $3.6 billion.
"Now that the acquisition is closed, the focus has switched from closing the acquisition to integration," Suva wrote in a client note.
Suva said Flextronics' operating profit margin has been stuck in the 3 percent range, but Suva expects the Solectron acquisition to lift margins.
Suva rates the stock "Hold." and raised his target price on the shares to $13.50 from $13.
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