Dj Avnet Price Target Raised To $48.00/Share From $43.00 By Wells Fargo

Electronic components distributor Avnet (NASDAQGS:AVT) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 11.6% year on year to $6.32 billion. On top of that, next quarter’s revenue guidance ($6.35 billion at the midpoint) was surprisingly good and 7.9% above what analysts were expecting. Its non-GAAP profit of $1.05 per share was 10.2% above analysts’ consensus estimates.

Avnet (AVT) Q4 CY2025 Highlights:

• Revenue: $6.32 billion vs analyst estimates of $6.02 billion (11.6% year-on-year growth, 4.9% beat)
• Adjusted EPS: $1.05 vs analyst estimates of $0.95 (10.2% beat)
• Adjusted EBITDA: $205.1 million vs analyst estimates of $186.6 million (3.2% margin, 9.9% beat)
• Revenue Guidance for Q1 CY2026 is $6.35 billion at the midpoint, above analyst estimates of $5.89 billion
• Adjusted EPS guidance for Q1 CY2026 is $1.25 at the midpoint, above analyst estimates of $1.20
• Operating Margin: 2.7%, in line with the same quarter last year
• Market Capitalization: $4.88 billion

StockStory’s Take

Avnet’s fourth quarter results drew a positive market response, as management emphasized broad-based double-digit sales growth driven by particularly strong demand in the Asia region and a notable rebound in the Americas and Europe. CEO Philip Gallagher credited the quarter’s momentum to record revenues in Asia and improved seasonal growth across geographies, with the Electronic Components business and Farnell both contributing. He highlighted that "demand increased across most of the verticals and geographies we serve," pointing to robust activity in compute and aerospace and defense end markets.

Looking ahead, Avnet’s guidance is shaped by expectations for continued recovery in Western regions, ongoing demand from data center and industrial customers, and the potential for improved operating leverage as higher-margin product categories recover. Management cited ongoing customer order visibility and emerging pricing pressure in select components as key themes, with Gallagher stating, "the supply dynamics suggest there may be upward pricing pressure across many technologies going forward." CFO Kenneth Jacobson added that the company expects further recovery in higher-margin regions, particularly as Europe and the Americas return to more typical seasonality.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to record Asia revenues, improvements in Europe and the Americas, and gains in higher-margin components and supply chain services.

• Record Asia sales: The Asia region reached over $3 billion in sales, marking its sixth consecutive quarter of year-on-year growth and now representing more than half of total company sales. Management identified both data center and industrial demand as key contributors.

• Demand creation and design wins: Avnet’s field application engineers drove a 7% sequential increase in demand creation revenues, with management noting a rise in design registrations and wins—an indicator of future sales pipeline strength.

• Farnell margin improvement: Farnell, Avnet’s high-service distribution arm, saw sequential and year-over-year growth, partially due to a recovering European market and increased sales of higher-margin onboard components. Management expects further margin gains as the mix continues to shift.

• IP&E business growth: The Interconnect, Passive, and Electromechanical (IP&E) segment posted double-digit growth, with management highlighting cross-selling opportunities and higher gross margins compared to core semiconductors.

• Inventory and supply chain efficiency: Avnet reduced inventory days and improved working capital, while also managing increased deliveries of high-demand memory and storage products—most of which shipped in January, reflecting effective supply chain execution.

Drivers of Future Performance

Avnet’s outlook focuses on sustained demand recovery, regional mix improvements, and the impact of evolving pricing trends on margins and growth.

• Regional mix and seasonal recovery: Management expects the Americas and Europe to benefit from a return to more typical seasonality, which should boost both revenue and operating margin as the sales mix shifts toward higher-margin regions, supporting improved overall profitability.

• Pricing trends and supply constraints: The company is seeing early signs of pricing pressure in memory, storage, and select passive components due to strong data center and industrial demand. Management noted that spot price increases could lift average selling prices and margin dollars, especially for non-contracted business.

• Margin expansion drivers: Farnell’s margin outlook is tied to continued recovery in Europe and an improving mix of onboard components. Management also pointed to ongoing cost controls and strategic investments in digital tools and AI as factors that could accelerate margin gains, particularly if demand in Western regions continues to strengthen.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will closely watch (1) continued regional recovery in Europe and the Americas for signs of margin expansion, (2) the evolution of pricing dynamics in memory and passive components as supply-demand imbalances shift, and (3) progress in digital and supply chain initiatives designed to improve operating leverage. Developments in inventory management and the mix of higher-margin product sales will also be important markers of execution.

Avnet currently trades at $60.15, up from $52.68 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).

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What Happened?

Shares of electronic components distributor Avnet (NASDAQGS:AVT) jumped 11.6% in the afternoon session after the company reported strong fourth-quarter results for its quarter ended December 2025, beating analyst estimates for both revenue and profit. 

The electronic components distributor posted revenue of $6.32 billion, an increase of 11.6% year on year, surpassing consensus estimates by 4.9%. Furthermore, Avnet's adjusted earnings per share (EPS) came in at $1.05, a notable improvement from the $0.87 recorded in the year-ago quarter and 10.2% above expert forecasts. Adding to the positive results, the company issued optimistic revenue guidance for the next quarter of $6.35 billion at the midpoint, which was 7.9% higher than what analysts were expecting. The strong performance and surprisingly good outlook signaled a healthy quarter for the company, boosting investor confidence.

What Is The Market Telling Us

Avnet’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. Moves this big are rare for Avnet and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 7 days ago when the stock gained 3.5% on the news that President Trump cooled fears of a transatlantic trade war by calling off scheduled tariffs on European allies. 

The rally followed a productive meeting in Davos with NATO Secretary General Mark Rutte, where a "framework of a future deal" regarding Greenland and the Arctic region was established. By explicitly ruling out the use of military force and suspending the 10% tariffs previously set for February 1st, the administration provided the "sigh of relief" the market desperately needed after Tuesday's sharp sell-off.Technology and semiconductor leaders like Nvidia and AMD spearheaded the recovery as investors quickly pivoted back into growth stocks. 

The "Sell America" trade from the prior session reversed sharply, with the Nasdaq Composite jumping 1.5% and the S&P 500 erasing its 2026 losses. This rebound was further supported by a stabilization in the bond market; as tariff-related inflation fears subsided, the 10-year Treasury yield retreated from its recent highs, creating a more favorable backdrop for equity valuations across the board.

Avnet is up 21% since the beginning of the year, and at $59.69 per share, has set a new 52-week high. Investors who bought $1,000 worth of Avnet’s shares 5 years ago would now be looking at an investment worth $1,662.