Flex Ltd. FLEX stock has proved to be resilient amid a volatile market environment, with a 38.7% gain in the past year. Flex has also outperformed the Zacks Electronics - Miscellaneous Products industry’s decline of 37%. Also, the company outperformed the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 18.3% and 18.2%, respectively. The stock has risen 19.6% in the past six months.

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It closed the last trading session at $38.58, down from its 52-week high of $45.10. Does this recent pullback indicate a buying opportunity? Let's analyze the pros and cons of FLEX and decide on the optimal strategy for your portfolio.

Growth Drivers

Flex is experiencing strong momentum across its data center, medical devices and consumer-related markets. The company's strategic programs in cloud, power and automotive businesses have contributed to its robust top-line growth in the fiscal third quarter. The initiatives are likely to positively impact Flex’s performance in the fiscal fourth quarter. Artificial intelligence (AI)-driven cloud transformation led to 45% year-over-year growth in the data center business in the fiscal third quarter. It continues to anticipate a long-term multi-year data center CAGR of 20%.

On Feb. 20, 2025, Flex announced a significant expansion of its U.S. manufacturing capacity with the launch of a new 400,000-square-foot facility in Dallas dedicated to power product manufacturing. This new facility strengthens Flex’s efficiency and production capabilities, particularly for its grid-to-chip data-center power infrastructure solutions, including power distribution units, power pods and low-voltage switchgear.

Flex Ltd. Price and Consensus

Flex Ltd. price-consensus-chart | Flex Ltd. Quote

Flex has consistently used acquisitions to expand its manufacturing footprint and enter new markets. Key acquisitions, including Bose facilities, Mirror Controls International (MCi), Alcatel-Lucent, and Nextracker, have strengthened its presence in audio, automotive, telecom and smart solar tracking. Smaller acquisitions have also bolstered its capabilities in medical devices, consumer electronics, household industrial and lifestyle markets.

Recent strategic moves include the May 2024 acquisition of FreeFlow, enhancing Flex’s presence in secondary markets and sustainability solutions. In November 2024, Flex acquired JetCool Technologies, further enhancing its data center and power solutions to help hyperscale and enterprise customers address growing challenges related to power, heat and scalability in the AI era. Also, Flex finalized its $325 million acquisition of Crown Technical Systems, expanding its power portfolio and increasing its presence in the U.S. data center and utility power markets.

Estimate Revisions for FLEX

In the past 60 days, analysts have raised their earnings estimates for the current quarter by 6.2% and for the current quarter by 6.5%. Earnings estimates for the current and the next year have been revised upward by 7% and 2.5%, respectively.

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Flex’s Positive Outlook Signals Strong Growth Ahead

Flex delivered strong fiscal third-quarter results and issued an optimistic outlook for fiscal 2025. Flex now expects revenues of $25.4-$25.8 billion (up from $24.9-$25.5 billion) and adjusted EPS of $2.57-$2.65 (previously $2.39-$2.51). With $757 million in free cash flow generated so far, the company is on track to surpass its $800 million full-year target.

How Should Investors Play FLEX Stock?

Backed by strong fundamentals, this Zacks Rank #2 (Buy) stock appears primed for further appreciation. The company has an average brokerage recommendation (ABR) of 1.22 on a scale of 1 to 5 (Strong Buy to Strong Sell). ABR is the calculated average of actual recommendations made by brokerage firms and portends the future potential of the stock.

Other Stocks to Consider in Computer Technology Space

Some other top-ranked stocks from the broader technology space are InterDigital, Inc. IDCC, BlackBerry Limited BB and KLA Corporation KLAC. IDCC presently sports a Zacks Rank #1 (Strong Buy), whereas BB and KLAC carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for InterDigital’s 2025 earnings per share is pegged at $9.30, unchanged in the past seven days. IDCC earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with the average surprise being 158.4%. The company’s long-term earnings growth rate is 15%. Its shares have jumped 55.2% in the past six months.

BlackBerry’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 131.25%. In the last reported quarter, BB delivered an earnings surprise of 200%. Its shares have surged 112.5% in the past six months.

The Zacks Consensus Estimate for KLA Corporation’s fiscal 2025 earnings per share is pegged at $31.59, unchanged in the past seven days. KLAC’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 6.35%. The company’s long-term earnings growth rate is 15.6%. Its shares have increased 14.7% in the past three months.

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This article originally published on Zacks Investment Research (zacks.com).

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