UBS Remains Sidelined on Jabil Circuit (JBL) Following 2Q Weakness
UBS maintained a Neutral rating on Jabil Circuit (NYSE: JBL), and cut the price target to $22.00 (from $25.00), following the company's 2Q earnings report. In F2Q Green Point sales came in $150mn below expectations, but higher margins in the EMS business mitigated the overall impact on EPS. The weakness in results can be attributed to Apple-related softness in its Green Point mobility business.
Analyst Steven Milunovich commented, "Jabil results were below Street estimates primarily due to Apple-related softness in its Green Point mobility business. In F2Q Green Point sales came in $150mn below expectations, but higher margins in the EMS business mitigated the overall impact on EPS. We forecast F3Q sales down 4% sequentially from continued weakness at Apple and softness in legacy EMS. We now look for F16E EPS of $2.12, down from $2.61 previously. Free cash flow for F16E is estimated at 250-300mn with capex at $800mn, down almost $100mn from prior guidance. Capex remains high historically, which likely means that stock repurchases will be muted in the coming quarters. Jabil said it will host its first analyst day in four years to elaborate on growth drivers."
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Shares of Jabil Circuit closed at $21.96 yesterday.