Jabil Circuit (JBL) - Bull of the Day

Jabil Circuit's (JBL) first quarter 2011 results were above the Zacks Consensus Estimate, driven by strong top-line growth and better-than-expected operating margins.

We expect Jabil to achieve strong top-line growth with operating margin leverage and robust earnings momentum over the long term, riding on new business wins, growth in IT enterprise spending, a recovery in end-market demand and transition to higher margin business. The company provided upbeat second quarter guidance as it is experiencing stable business trends and growth across all business areas.

We have raised our revenue and EPS estimates by 4.7% and 15.3%, respectively, for fiscal 2011. However, intense competition and a slowdown at Jabil's customer Cisco (15% revenue share in 2010) are areas of concern. We upgrade the stock to Outperform and raise our target price to $24.00.
 
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