Needham & Company Reiterates Buy on Fabrinet (FN) Following Production Capacity Acquisition
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Needham & Company reiterated a Buy rating and $54.00 price target on Fabrinet (NYSE: FN) following the company's acquisition of 80,000 square feet of production capacity. Needham believes that the deal could add as much as $30 million per quarter to revenues and $0.05-0.10 per share per quarter.
Analyst Alex Henderson commented, "We like it. Fabrinet acquires 80,000 square feet of production capacity at 0.5x EV/Sales, and it's already profitable with 10 customers. The deal should be accretive from the get-go. Longer term, we think it could add as much as $30 million per quarter to revenues and $0.05-0.10 per share per quarter. Fabrinet has proven out the template at FN West and they are duplicating it. We think they could bolt on one of these every year. This deal likely adds several points to the growth rate, improves GMs and operating margins and provides a feeder to the FN Thailand operations as the products from the NPI facilities move to scale."
Shares of Fabrinet closed at $43.12 yesterday.
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