Investing.com -- Fabrinet (NYSE: FN) shares fell 12.88% Thursday despite reporting third quarter revenue that exceeded analyst expectations.

The optical components manufacturer posted revenue of $1.21 billion for the third quarter, up 39% YoY and 7% sequentially, beating estimates by $37 million. Telecom sales drove the strength, rising 55% YoY and 13% sequentially to $628 million, including data center interconnect revenue of $197 million, up 91% YoY and 39% sequentially.

However, Datacom and high-performance computing segments underperformed due to supply constraints, according to Barclays analysts. The firm noted that fourth quarter guidance underwhelmed as supply constraints continue to limit upside potential. HPC revenue, running at approximately $150 million, was pushed to the next quarter, though Fabrinet secured additional business that will increase the run-rate.

Rosenblatt analysts raised their price target to $750 from $715, commenting: "We are upbeat on the OCS and CPO opportunities for FN. CPO relies on advanced semiconductor packaging technologies, and Fabrinet has been investing with focus on scalable manufacturing and broader system level integration. The company made a minority investment in Raytek Semiconductor, a Taiwan-based provider of advanced wafer-level packaging technologies. This investment supports FN's evolution from silicon photonics into more advanced packaging and integration solutions, reinforcing its role as a key manufacturing player within the CPO ecosystem."

Wolfe analysts acknowledged the positive overall results while noting the sequential decline in Datacom would disappoint investors. The firm highlighted several positive developments, including strong Telecom performance, new direct-to-hyperscaler deals, a new printed circuit board assembly win with Amazon beyond existing Trainium business, a new industrial laser outsourcing deal, and expansion of forward-looking manufacturing capacity.