TD SYNNEX SNX shares have gained 13.7% in the year-to-date period, underperforming the Zacks Computer and Technology Sector and the S&P 500 index’s growth of 30.6% and 27.1%, respectively. Although SNX’s current situation reflects low confidence among investors, the company is continuously expanding its footprint through new partnerships.

Recently, TD SYNNEX partnered with LastPass to make the latter’s password and identity management products accessible to IT resellers and managed service providers in North America. This partnership aims to streamline the purchasing process of LastPass products through SNX’s distribution network.

In the past year, TD SYNNEX has strengthened its partnership with industry leaders, including International Business Machines IBM, Cisco CSCO, Elastic and Amazon AMZN. For instance, Tech Data became the authorized distributor of a Search AI Company namely Elastic throughout Australia and New Zealand.

TD SYNNEX also became IBM’s sole distribution partner throughout the English and Dutch Caribbean countries. TD SYNNEX has been in a long-term partnership with Amazon. It recently received the Amazon Relational Database Service Services Delivery Specialization designation.

Furthermore, Cisco has selected TD SYNNEX’s company Tech Data as its distribution partner in India. These partnerships contribute to TD SYNNEX’s long-term outlook, but, in the near term, TD SYNNEX is suffering from multiple headwinds.

TD SYNNEX YTD Performance

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Near-Term Challenges for TD SYNNEX

TD SYNNEX’s near-term growth prospects are suffering from softened IT spending as organizations push back their investments in big and expensive technology products on growing global slowdown concerns amid the current macroeconomic challenges and geopolitical tensions.

Higher-than-expected inflationary pressure has led to a substantial increase in component costs and wages, which is anticipated to continue hurting the company’s profitability in the next few quarters. TD SYNNEX also has a leveraged balance sheet. The company’s long-term debt has increased significantly in the last seven years to $3.74 billion as of Aug. 31, 2024, from $965 million as of Nov. 30, 2016.

TD SYNNEX’s financials have further been impacted by its major operations in China. The U.S.-China trade war is a major woe for the company. SNX expects to generate revenues between $14.9 billion and $15.7 billion in the fourth quarter of 2024. The Zacks Consensus Estimate for the same is pegged at $15.3 billion, indicating year-over-year growth of 6%. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $3.13, indicating a year-over-year decline of 2.24%.

What Should Investors Do?

Although TD SYNNEX’s expansion of the partner base aids its long-term growth, the near-term prospects might be hurt by macroeconomic, geopolitical and financial challenges.

Considering all these factors, we suggest investors to stay away from this Zacks Rank #4 (Sell) stock at present. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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