We raise our 12-month target by $1 to $13 on 11.4x our FY 21 (Mar.) EPS estimate, in line with electronic manufacturing services (EMS) peers. We lift our FY 21 EPS estimate by $0.09 to $1.14 and FY 22's by $0.11 to $1.36. FLEX prints Jun-Q adjusted EPS of $0.23 vs. $0.27, topping consensus by $0.06. Sales fell 16.6% to $5.2B, beating consensus by $214M on outperformance in Health Solutions, from demand for ventilators and oxygenators. Both Automotive and Consumer Devices remained weak, as production constraints pressured sales and profitability. Adjusted operating margin edged out estimates slightly (3.2% vs. 3.1%), as lower SG&A (down 21% YoY) helped offset cost overruns related to Covid-19 ($100M). Broad-based sequential improvement from easing virus-related disruptions were priced into shares heading into the quarter on readthrough from other EMS peers - from here, more realized manufacturing improvements are needed to drive profitability and shares higher from current levels, in our view.
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