Contract electronics manufacturer Fabrinet is experiencing a surge in its stock price as analysts praise its strong quarterly results and highlight an opportunity in artificial intelligence (AI). The company’s stock is on pace for a new closing high, reaching a record level not seen since June 2010, according to Dow Jones Market Data.
Lake Street Capital Markets analyst Troy Jensen has maintained a Buy rating on Fabrinet and raised his price target to $165 from $130, citing the company’s solid fourth-quarter results and financial forecasts that align with Wall Street’s expectations. Jensen also pointed out that while customers are reducing their inventories, Fabrinet is benefitting from a large AI transceiver project, which is expected to drive overall growth.
Jensen wrote in a report, We believe Fabrinet has solid visibility into datacom strength continuing, and we believe growth will accelerate in calendar 2024 once legacy telecom demand returns to normal. He emphasized Fabrinet’s leadership position in the market, its track record of growth and profitability, and the attractive entry point for investors, making it an opportune time to build or add to positions.
Needham analysts also expressed optimism about Fabrinet, acknowledging its recent financial results and potential in the AI sector. They maintained a Buy rating on the stock, increased their price target to $165 from $150, and raised their revenue and earnings forecasts accordingly.
Fabrinet produces components, lasers, and subsystems for a range of blue-chip customers. The company’s exposure to the AI market and its ability to capitalize on datacom strength have garnered positive attention from analysts. With their positive outlook on Fabrinet’s future growth prospects, both Lake Street Capital Markets and Needham analysts recommend considering investments in the company.
In terms of recent performance, Fabrinet posted strong financial results and provided guidance for the first fiscal quarter that aligns with analysts’ expectations. These factors, combined with the promising AI opportunity, have contributed to the company’s record-setting stock price.
As Fabrinet continues to benefit from its core business as a contract electronics manufacturer, its involvement in the AI space could further accelerate its growth in the coming years. With a strong track record, solid visibility, and favorable market conditions, Fabrinet seems well-positioned for sustained success.
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cite source: Dattilo, Emily. Contract Electronics Manufacturer Fabrinet Sees Record High as Analysts Praise Strong Results and AI Opportunity. Barron’s, 19 Oct. 2021.