SNX stock is still attracting buyers on January 10, 2020, after the company reported excellent financial results a day earlier. We first wrote about this stock and how it traded in the after-hours market on January 9, 2020, here.

Barrington analyst Vincent Colicchio raised his price target for Synnex to $150 from $118 after the company reported better than expected Q4 earnings and announced a spin-off plan. The analyst’s new target is based on a sum-of-the-parts valuation. He keeps an Outperform rating on Synnex.

Raymond James analyst Adam Tindle raised his price target for Synnex to $165 from $140 and maintained a Strong Buy rating following Q4 results that featured significant upside to revenue, profit dollars and cash flow and the announcement that it will split TS and Concentrix into two separate publicly traded entities. The analyst tells investors in a research note that he believes the full integration of the Convergys acquisition giving Concentrix necessary scale, and very strong fundamental performance in both businesses without a corresponding improvement in relative valuation were catalysts for this change.

Loop Capital analyst Ananda Baruah reiterated a Buy rating for Synnex and raised his price target to $175 from $160 following the company’s Q4 results, saying the company delivered “all sorts” of catalysts. Specifically, Baruah calls out the “material” beat and raise as well as the announcement that it will split into two public companies. Particularly in the context of continually strong beat-and-raise results from both businesses, he believes splitting the companies will unlock even greater equity value potential.

Stifel analyst Matthew Sheerin raised his price target for Synnex to $150 from $140 after the company reported sales and earnings significantly above Street on upside from its cloud-server-integration business and announced plans to split into two public companies. With Concentrix’s integration of Convergys proceeding ahead of schedule, the timing of the split makes sense, Sheerin tells investors in a research note. He believes the spin off should unlock shareholder value and keeps a Buy rating on Synnex.

On January 9, 2020, SYNNEX Corporation (NYSE: SNX) announced financial results for the fiscal fourth quarter and fiscal year ended November 30, 2019. The company nailed both earnings and revenue beats. Synnex reported Q4 adjusted EPS of $4.26 versus the consensus estimate of $3.61. The company reported Q4 revenue of $6.58B versus the consensus estimate of $5.99B.

“Our record financial performance in Q4, driven by strong contributions from our Technology Solutions and Concentrix segments, is a very satisfying conclusion to an exceptional year,” said Dennis Polk, SYNNEX President and CEO. “Fiscal 2019 was a defining year for SYNNEX, as we invested in, integrated and operated both businesses at scale, while generating solid returns from each segment. Fiscal 2020 will be another defining period as we plan to separate SYNNEX and Concentrix to further enable each entity to achieve its growth potential.”

Fourth Quarter Fiscal 2019 Highlights

  • Technology Solutions: Revenue was $5.4 billion, up 17.4% from the prior fiscal year fourth quarter. Operating income was $167 million, or 3.1% of segment revenue, compared to $126 million, or 2.7% of segment revenue, in the prior fiscal year fourth quarter. Non-GAAP operating income was $178 million, or 3.3% of segment revenue, compared to $139 million, or 3.0% of segment revenue, in the prior fiscal year fourth quarter.
  • Concentrix: Revenue was $1.2 billion, up 24.7% from the prior fiscal year fourth quarter primarily due to the impact of the Convergys acquisition on October 5, 2018. Operating income was $101 million, or 8.4% of segment revenue, compared to $75 million, or 7.7% of segment revenue in the prior fiscal year fourth quarter. Non-GAAP operating income was $161 million, or 13.3% of segment revenue, compared to $129 million, or 13.2% of segment revenue, in the prior fiscal year fourth quarter.
  • The trailing fiscal four quarters Return on Invested Capital (“ROIC”) was 8.8% compared to 7.9% in the prior fiscal year fourth quarter. The adjusted trailing fiscal four quarters ROIC was 11.0%.

Fiscal 2019 Highlights

  • Technology Solutions: Revenue was $19.1 billion, up 10.1% from the prior fiscal year. Operating income was $519 million, or 2.7% of segment revenue, compared to $405 million, or 2.3% of segment revenue, in the prior fiscal year. Non-GAAP operating income was $564 million, or 3.0% of segment revenue, in fiscal year 2019, compared to $463 million, or 2.7% of segment revenue, in the prior fiscal year.
  • Concentrix: Revenue was $4.7 billion, up 91.1% from the prior fiscal year primarily due to the full year impact of the Convergys acquisition on October 5, 2018. Operating income was $294 million, or 6.3% of segment revenue, compared to $145 million, or 5.9% of segment revenue, in the prior fiscal year. Non-GAAP operating income was $531 million, or 11.3% of segment revenue, in fiscal year 2018, compared to $257 million, or 10.4% of segment revenue, in the prior fiscal year.

First Quarter Fiscal 2020 Outlook

The following statements are based on SYNNEX’ current expectations for the fiscal 2020 first quarter. Non-GAAP financial measures exclude the impact of acquisition-related and integration expenses, the amortization of intangibles and the related tax effects thereon. These statements are forward-looking and actual results may differ materially.

  • Revenue is expected to be in the range of $5.240 billion to $5.540 billion.
  • Net income is expected to be in the range of $114.7 million to $124.6 million and on a non-GAAP basis, net income is expected to be in the range of $157.3 million to $167.2 million.
  • Diluted earnings per share is expected to be in the range of $2.21 to $2.40 and on a non-GAAP basis, diluted earnings per share is expected to be in the range of $3.03 to $3.22, based on estimated outstanding diluted weighted average shares of 51.3 million.
  • After-tax amortization of intangibles is expected to be $36.2 million, or $0.70 per share.
  • After-tax acquisition-related and integration expense is expected to be $6.4 million, or $0.12 per share.

SYNNEX announced today that its Board of Directors declared a quarterly cash dividend of $0.40 per common share, a 2.5-cent increase over the previous quarter’s dividend. The dividend is payable on January 31, 2020 to stockholders of record as of the close of business on January 24, 2020.

finviz dynamic chart for  snx