Jabil Circuit PT Lowered to $24.00 (JBL)
Research analysts at Stifel Nicolaus reduced their target price on shares of Jabil Circuit (NYSE:JBL) from $26.00 to $24.00 in a report released on Wednesday, Analyst RN reports. The firm currently has a “buy” rating on the stock. Stifel Nicolaus’ price objective points to a potential upside of 21.70% from the company’s current price.
The analysts wrote, “We expected Jabil’s November-quarter and Feb.-quarter to be ugly, driven by the phase-out of BlackBerry, and weak enterprise demand. What we did not see coming: 1) the divestiture of Jabil’s repair-services business, which accounted for $1.1bn and roughly $80mn in EBIT; and 2) an expected 25% q/q decline in its core diversified manufacturing services segment (DMS) due to a ‘demand shift’ at a major customer (we believe Apple). The very large drop in sales will result in significant negative leverage, leading to 2Q EBIT margin guidance of 1.5% at midpoint and EPS guide of $0.05-$0.15, vs. our $0.50 estimate. Although Jabil did not elaborate on the customer issue, we believe it stems from Jabil’s casing-manufacturing business for Apple being skewed more toward the iPhone 5C than the 5S, for which demand reportedly has been much stronger. Jabil said it was retooling capacity in anticipation of another large program from the customer. In the meantime, Jabil will need to absorb its high costs as it also restructures operations to account for the BlackBerry exit. We can see why some investors would throw in the towel, given that it could take a few quarters for management to right the ship and regain credibility. But we also see the February quarter marking the bottom in sales and earnings, and expect slow and steady progress into FY15, when Jabil should be back to a $2.00 EPS run rate. We also note FCF is expected to be $400mn-$500mn in FY14 (a 11% yield), and the company authorized a $200mn share repurchase. We cut estimates and lower PT to $24 from $26 but maintain our Buy rating.”
Shares of Jabil Circuit (NYSE:JBL) traded down 21.86% on Wednesday, hitting $15.4099. The stock had a trading volume of 7,179,816 shares. Jabil Circuit has a one year low of $16.39 and a one year high of $24.32. The stock’s 50-day moving average is $20.1 and its 200-day moving average is $21.60. The company has a market cap of $3.131 billion and a price-to-earnings ratio of 11.02.
Jabil Circuit (NYSE:JBL) last released its earnings data on Tuesday, December 17th. The company reported $0.51 earnings per share for the quarter, missing the analysts’ consensus estimate of $0.55 by $0.04. The company had revenue of $4.61 billion for the quarter, compared to the consensus estimate of $4.49 billion. During the same quarter last year, the company posted $0.61 earnings per share. Jabil Circuit’s revenue was down .6% compared to the same quarter last year. Analysts expect that Jabil Circuit will post $2.31 EPS for the current fiscal year.
Several other analysts have also recently commented on the stock. Analysts at Longbow Research downgraded shares of Jabil Circuit from a “buy” rating to a “neutral” rating in a research note to investors on Wednesday. Separately, analysts at RBC Capital cut their price target on shares of Jabil Circuit from $24.00 to $19.00 in a research note to investors on Wednesday. Finally, analysts at Citigroup Inc. downgraded shares of Jabil Circuit from a “neutral” rating to a “sell” rating in a research note to investors on Wednesday. They now have a $14.00 price target on the stock, down previously from $24.00. Three investment analysts have rated the stock with a sell rating, five have given a hold rating, five have assigned a buy rating and one has given a strong buy rating to the stock. The company has an average rating of “Hold” and an average target price of $22.55.
Jabil Circuit, Inc (NYSE:JBL), is a providers of worldwide electronic manufacturing services and solutions.
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