Sanmina price target raised to $95 from $87 at BofA

BofA raised the firm’s price target on Sanmina (SANM) to $95 from $87 and keeps a Neutral rating on the shares after the company recently announced its intention to acquire the data center infrastructure manufacturing business of ZT systems from Advanced Micro Devices (AMD). The firm says the deal increases Sanmina’s scale and revenues from higher margin cloud/AI, as it will now have full rack/system integration capability; gets the company early access to new GPU/rack reference designs as AMD’s preferred NPI manufacturing partner; adds three manufacturing facilities; and expands Sanmina’s footprint in the U.S. while denying the Taiwanese ODMs/EMS a chance to improve their footprint. While the firm leaves estimates unchanged for now, it applies a slightly higher multiple in anticipation of an improved mix of higher margin Cloud/AI revenue.