Plexus Lowers 1Q Outlook
Plexus Corp. (PLXS) has lowered its first-quarter 2013 guidance due to weaker-than-expected demand across its business segments. The company's first quarter 2013 ended on December 29, 2012. The company also stated that lower revenue from the Networking/Communications segment led to reduced revenue outlook.
The company lowered its fiscal first quarter revenue guidance from $550 million–$580 million to $531 million. Though the revenue guidance reflects marginal improvement from the year-ago quarter, it is well short of the Zacks Consensus Estimate of $561 million.
Moreover, the disengagement with Juniper (JNPR) is expected to impact revenue in the short term as the company contributed 16% of the revenues and was the only customer accounting for 10% or more of revenues during fiscal 2012.
Now coming to the earnings part, Plexus also lowered its earnings per share expectation from 50 cents–55 cents to the range of 45 cents–47 cents. The Zacks Consensus Estimate is pegged at 51 cents, flat on a year-over-year basis.
In fourth quarter 2012, Plexus reported adjusted earnings of 66 cents per share, which surpassed the Zacks Consensus Estimate by 3 cents and was in line with the high end of management’s guided range of 60 cents–66 cents per share.
Total revenue increased 10.5% on a year-over-year basis to $594.8 million, which was at the lower end of management’s guided range of $590 million–$620 million, but missed the Zacks Consensus Estimate of $604.0 million. The year-over-year increase in revenue was primarily driven by strong performance from all its business segments.
We believe that new business opportunities, particularly in the industrial/commercial and medical sector along with global expansion will drive growth over the long term. Moreover, the disengagement with Juniper is expected to improve the product mix.
Nonetheless, intense competition, continued component challenges and supply chain constraints remain major concerns for Plexus over the long term. Additionally, the company’s tepid forecast is a headwind going forward. Macroeconomic sluggishness and startup costs of new programs are the near-term headwinds.
Currently, Plexus has a Zacks Rank #3 (Hold).
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