Key Highlights

  • FLEX shares are indicated up 9.38% at $91.17 in premarket, against a prior close of $83.35.
  • Q2 net sales rose 25% to $8.5 billion, and record adjusted EPS of $1.18 beat the $1.05 consensus.
  • Fiscal 2027 adjusted EPS guidance rose to $4.84 to $5.16 from $4.42 to $4.74.
  • Q3 guidance calls for sales of $8.87 billion to $9.17 billion and adjusted EPS of $1.19 to $1.25.
  • Flex unveiled the Axiom name for its planned Cloud and Power Infrastructure spin-off.

Flex (NASDAQ:FLEX) shares are indicated up 9.38% at $91.17 in premarket after fiscal second-quarter results beat expectations and management raised its outlook. Net sales of $8.5 billion, up 25%, topped the $8.14 billion estimate, and record adjusted EPS of $1.18 beat the $1.05 consensus. Shares closed Tuesday at $83.35, up 8.26%.

Flex, incorporated in Singapore and based in Austin, Texas, provides design, engineering, manufacturing and supply chain services to OEMs. It reports Flex Agility Solutions and Flex Reliability Solutions segments, and its expanding data center power and cooling portfolio includes critical power, embedded power and liquid cooling. It is led by CEO Revathi Advaithi.

Margins and Cash Flow

GAAP operating margin was 4.9%, and adjusted operating margin was 7.1% against 6.0% a year earlier. GAAP EPS was $0.70. Operating cash flow was $501 million and free cash flow was $261 million, which was reduced by $61 million of separation costs tied to the planned spin-off.

Higher Outlook Across the Board

Fiscal 2027 net sales guidance rose to $34.9 billion to $35.9 billion from $33.7 billion to $35.2 billion, and adjusted operating margin guidance rose to 7.6% to 7.8% from 7.0% to 7.2%. Adjusted EPS guidance of $4.84 to $5.16 implies 52% growth at the midpoint.

Third-quarter guidance calls for net sales of $8.87 billion to $9.17 billion, adjusted operating income of $685 million to $715 million and adjusted EPS of $1.19 to $1.25, roughly in line with estimates. The Cloud and Power Infrastructure business is guided to sales growth of 75% to 85% for the year.

Spin-Off Progress and EPC Power

Advaithi said the acquisition of EPC Power completes the company's end-to-end power portfolio and will be immediately accretive in fiscal 2027. Flex also unveiled the Axiom name and anticipated leadership for the planned spin-off of its Cloud and Power Infrastructure segment.

The rally follows a selloff of more than 50% from the 52-week high of $166.86, and the 52-week range runs from $53.07 to $166.86. BofA recently cut its target to $150 from $180 with a Buy rating. The technology sector ETF is up about 0.6% in premarket, so Flex is outpacing the group.