Fabrinet Q4 Reflects AI Momentum And New Client Wins, These Analysts Raise Their Forecasts

Shares of Fabrinet FN skyrocketed in early trading on Tuesday, after the company reported results for its fiscal fourth quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

• JPMorgan analyst Samik Chatterjee reiterated a Neutral rating, while raising the price target from $240 to $285.
• Needham analyst Alex Henderson maintained a Buy rating, while lifting the price target from $270 to $280.

Check out other analyst stock ratings.

JPMorgan: Fabrinet's Datacom business had been the source of upside in recent quarters, driven by tailwinds related to AI investments. Analysts were surprised that the company's non-Datacom businesses drove its better-than-expected performance in the fiscal fourth quarter.

This was "led by DCI demand and new system wins in Telecom as well as the dissipation of inventory headwinds associated with EV battery chargers," Chatterjee added.

Management has guided to sequential revenue growth across all product categories in the first quarter of fiscal 2025, "which is leading to aggregate revenue to surpass expectations heading into the quarter," the analyst stated.

Fabrinet's ability to win new customers "was again on display as it highlighted a large win with Ciena CIEN, which by our estimate could supercede its prior largest Telecom customers in magnitude, as well as highlighting six ZR customers, which in our view continues to showcase the headroom for Fabrinet to win and ramp new businesses particularly in the current backdrop of recent M&A and management transitions in the industry," he further wrote.

Needham: Fabrinet reported strong results and guidance, while announcing a significant new customer win in its Systems business with Ciena and "a major new plant expansion twice the size previously expected," Henderson said.

"Fabrinet is demonstrating its confidence in its growth outlook with the $110 million capacity expansion," he added.

Fabrinet expects its new plant build to "handle an additional $2.4 billion in Revenues annually when filled," the analyst stated. "The impact on GMs at opening is expected to be a small 15 BPs hit which will go away as the capacity ramps," he further wrote.

FN Price Action: Shares of Fabrinet had risen by 19% to $275.55 at the time of publication on Tuesday.

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