TD SYNNEX ($SNX) – A massive re-rating waiting to happen

TD SYNNEX is one of the world's largest IT distributors. The market prices it like one. It's actually two fundamentally different businesses.

Distribution: $1.72B annualized operating income, growing 42% YoY, mix shifting toward software, security, and cloud. At 9x (peer midpoint), that's ~$15.5B EV or roughly the entire current market cap.

Hyve: A custom hyperscale ODM with programs across all five top US hyperscalers, $636M annualized operating income, growing 66% YoY. At 15x (below where Celestica trades), that's ~$9.5B standalone EV. The market is ascribing approximately zero to it.

Depending on which multiples you give Hyve, there could be a serious re-rating as it gets a larger part of the revenue mix and investors start to reprice the stock.

My assumptions for a SOTP is $272 implied vs $193 today. ~40% upside using run-rate earnings and peer multiples. No growth assumption baked in.

The mispricing exists because Hyve only started reporting as a standalone segment this quarter. Four quarters of visible numbers should make the blended distributor multiple increasingly hard to justify.