Citi Increases JBL Target from $20 to $23

Citi Analysts report being impressed with Jabil Circuit, Inc.'s JBL margin improvement in the quarter, however, maintaining its Hold (2S) rating as they believe the margin expansion story has largely played out. Citi reports inventory restocking is largely over and will not be a catalyst in 2011. Citi's estimates go higher on better than expected sales growth and outlook. More importantly, JBL improved operating margins in the quarter by growing Diversified Manufacturing Services (a high margin segment) faster than the average corporate growth rate. As a result, Citi EPS estimates reflect this improved profitability. Its target price rolls forward one quarter and goes to $23.00 from $20.00, representing 25% upside from current valuations.