Fabrinet shares tumble as Nvidia datacom weakness overshadows results
Fabrinet reported fiscal fourth-quarter revenue of $1.316 billion and non-GAAP EPS of $4.10, topping consensus, but shares fell after datacom sales declined sequentially due to lower sales to Nvidia.
Shares of Fabrinet (NYSE: FN ) tanked in early trading on Tuesday, after the company reported its fiscal fourth-quarter results. Here are the key analyst takeaways: Rosenblatt Securities analyst Mike Genovese reaffirmed a Buy rating and price target of $750. Needham analyst Ryan Koontz reiterated a Buy rating and price target of $650. BNP Paribas analyst Karl Ackerman maintained an Outperform rating and price target of $750.
Check out other analyst stock ratings. 32 billion. It beat expectations by 4%. According to Genovese, "strength across Telecom/DCI, Auto, and Industrial” drove the upside.
Datacom revenues contracted by 1% sequentially due to a decline in sales to Nvidia Corp (NASDAQ: NVDA ). com Inc (NASDAQ: AMZN ) and a merchant transceiver vendor, largely offset this. Another merchant transceiver customer is expected to begin contributing in the current quarter, the analyst stated. 4 billion, represents 43% year-over-year growth, "coming in ~$100 mn or 8% above our prior forecast," he noted.
6 billion, Genovese said. Completion of Building 10 in early 2027 "significantly expands capacity,” he added. 8 billion. "Assuming underlying demand trends hold, this trajectory gives FN a clear path toward ~$14B in total annual revenue capacity over the next 3—4 years at relatively low incremental CapEx," the analyst further wrote.
10 per share. 81 per share, respectively. The Telecom business remained strong, Koontz said. Growth accelerated to 70% year-on-year.
However, the decline in Datacom suggests that the Thailand-based company is losing share at Nvidia "likely to Chinese competition," he added. Management is "re-segmenting its products yet again, becoming much more opaque which we do not think investors will appreciate," the analyst wrote. Fabrinet also indicated that a new tax legislation in Thailand that is related to OECD (Organisation for Economic Co-operation and Development) is likely to increase its rates to high-single-digits, with short term volatility, he further stated.
BNP Paribas: Despite Fabrinet delivering a strong beat-and-raise quarter, the stock came under pressure in Monday’s after-hours trading, likely due to investors focusing on declining sales at Nvidia and a slower ramp of HPC (high-performance computing) sales, Ackerman said. "Fabrinet’s conviction that ’27 growth could accelerate from ’26 is the most important takeaway, we argue, supported by broadening customer and program engagements across data center and comms infrastructure," the analyst wrote. 18 per share, topping expectations, he added.
"To us, Fabrinet wouldn’t be aggressively expanding capacity if it didn’t have strong, multi-year demand visibility across its portfolio," Ackerman further stated. 63 at the time of publication on Tuesday. Read Also: Fabrinet CEO Sees ‘No End in Sight’ to Data Center Demand