Goldman Sachs Lowers PT On JBL To $25

Goldman Sachs, citing disappointing margins and a reduction in estimates, has lowered its price target on Jabil Circuit JBL from $26 to $25 but is maintaining its Buy rating on the stock. Says Goldman Sachs, in its report, “We view the pause in Jabil's margins as a minor setback and continue to expect the change in its business mix to drive margin expansion over the intermediate term (see our deep dive report on April 24). This is highlighted by our 4.53% operating margin estimate in FY12 (Aug year end), up from 4.30% in FY11E and 3.66% in FY10A. We remain buyers of JBL as we think the company's secular growth in DMS is not even close to being reflected in the stock's current valuation (9X GAAP P/E on our new estimate, or 30% discount to the market). In addition, we are encouraged that Jabil's board also sees value in the stock, having authorized a new buyback of $200mn.” JBL closed yesterday at $18.85.