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Research Alert: Avt Beats Q3; Expansion Challenges Structural Concerns

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-- CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

AVT delivered a strong Q3 beat with revenue of $7.12B (+34% Y/Y, +13% Q/Q) vs. $6.4B consensus and adjusted EPS of $1.48 (+76% Y/Y, +41% Q/Q) vs. $1.32 consensus. Operating margins expanded to 2.9% (+58bps Q/Q) with Electronic Components achieving 3.5% margins, demonstrating quality operating leverage as sequential operating income grew more than twice as fast as sales. Broad-based strength across all regions Asia +39%, EMEA +31%, Americas +27% suggests a genuine demand recovery beyond AI infrastructure into traditional electronics markets. Q4 guidance of $7.30B-$7.60B sales (midpoint $7.45B) and adjusted EPS of $1.70-$1.80 significantly exceeded consensus of $6.5B revenue and $1.41 EPS. Inventory optimization reached management's target with total days declining to 77 days, enabling $800M sales growth with only $54M operating cash flow usage. We believe the inventory destocking cycle has conclusively ended and AVT is well-positioned to capitalize on the electronics market recovery with sustained momentum.

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ISM US Manufacturing Index Indicates Steady Expansion in April

The Institute for Supply Management's US manufacturing index was unchanged in April from the 52.7 reading in March, below the expectations for a 53.2 reading in a survey compiled by Bloomberg as of 7:40 am ET.There were gains in the readings for new orders and prices, but declines in production, employment and order backlogs.Other regional manufacturing sector readings have been generally positive, with exception of the Dallas and Chicago regions.The monthly national manufacturing reading from the Institute for Supply Management is reported as a headline index, with readings above 50 indicating expansion and those below 50 indicating contraction. Component indexes measure new orders, production, employment, and prices.An increase in the index further above 50 is considered a sign of a strong US manufacturing sector, generally a positive for manufacturing industry stocks. However, if that strength comes with rising input prices due to shortages, that could be a negative for stocks as well as bonds.