Monday, June 13, 2011

Plexus Corp (NASDAQ: PLXS) Q3 2011 Price Target

Recent price: 31.79$
P/E Ratio: 13.06
3 Months Target Price: 25$

Company Description
According to Reuters, Plexus Corp. , along with its subsidiaries, provide optimized product realization solutions through a product realization value stream service model. It provides these services to original equipment manufacturers and other technology companies in the wireline/networking, wireless infrastructure, medical, industrial/commercial and defense/security/aerospace market sectors. It provides advanced product design, manufacturing and testing services to its customers with a focus on the mid-to-lower-volume, higher-complexity segment of the electronic manufacturing services market. Plexus offers a range of integrated services, which include product development and design, prototyping and new product introduction services, test equipment development, material sourcing and procurement, agile manufacturing services, fulfillment and logistic services, after-market support and regulatory requirements.

Confidence Margins
Strong resistance $39.66 (-25%)
Light resistance $38.71 (-22%)
Light support $28.57 (+10%)
Strong support $21.08 (+34%)

Even if the company reported results that beat estimates, shareholders of Plexus Corp gave up on the stock because of continued selling pressure. They might have done well as the company's shares show continued downside potential that will be beneficial to investors taking advantage of it.

Entry strategy
For the cautious investor:
Sell short the stock for 31$ or more.

For the risk-taking trader:
The September 2011 30$ out-of-the-money put option contract seems to be the right position to take, they can be acquired for about 205$ per contract.

Exit Strategy
For the cautious investor:
Buy to cover when the stock reaches 25$, or keep it until 21$ if you are more bearish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches 25$. This should provide a good return if the underlying reaches the target price as the contracts will get deep in the money.

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