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Home/News Feed/Celestica shifts to higher-margin ODM, boosting margins and valuation potential.
CLS
$335.02
+$0.25 +0.07%

Celestica shifts to higher-margin ODM, boosting margins and valuation potential.

Analyst Insights
07 May 2026
Seeking Alpha
View Source
Bullish
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Celestica is successfully transitioning from low-margin electronics manufacturing services (EMS) to higher-margin original design manufacturing (ODM), which is driving margin expansion and strengthening its investment appeal. The revenue mix from high-performance systems (HPS) rose to 42% in Q1 FY26, up 4 percentage points sequentially, directly improving adjusted operating margins. The company is positioned for further margin gains with advanced HPS products like 1.6T and 3.2T CPO switches expected to ramp up in late 2026 and 2027. This sustained margin growth and durable shift to ODM support a buy rating and could justify a higher valuation despite recent share price gains.

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