Celestica shares hit 2-year low as major customer RIM cuts

Celestica shares hit 2-year low as major customer RIM cuts

Stock Market Predictions

(Global Markets) - Shares of Celestica Inc (CLS.TO) fell as much as 9 percent to a two-year low on Friday, a day after its major customer Research In Motion (RIM.TO) (RIMM.O) posted disappointing results and slashed its outlook.

Contract electronics maker Celestica's 21 percent sales in the March quarter came from BlackBerry maker RIM.

"In light of RIM's relatively large contribution to Celestica's overall revenue base, we believe RIM's near-term challenges could remain a headwind for Celestica's valuation," Paradigm Capital analyst Gabriel Leung wrote in a note.

Leung slashed his target price on Celestica shares to $12 from $14.

Citigroup analyst Jim Suva lowered his rating on Celestica to "sell" from "hold" and reduced his target price on the stock to $8 from $12.

Facing intense pressure from Apple (AAPL.O) and Google (GOOG.O) in the smartphone market, RIM on Thursday warned that its latest models would not hit U.S. stores until well into the valuable back-to-school shopping season.

RIM admitted delays in revamping an aging smartphone lineup and slashed what most analysts viewed as an unattainable full-year earnings outlook. It also said it planned to cut an unspecified number of jobs.

Toronto-based Celestica's shares were down 73 Canadian cents at C$7.80 in late-morning trading on the Toronto Stock Exchange. They touched a low of C$7.74 earlier in the day.

(Reporting by Arnika Thakur in Bangalore; Editing by Maju Samuel)