Jefferies analysts initiated coverage on electronics manufacturing services provider Fabrinet (NYSE: FN) with a Hold rating and a price target of $230. The firm highlighted Fabrinet’s strong growth potential through its business with Nvidia (NASDAQ: NVDA), though it believes the stock already reflects the optimistic scenario.
Jefferies projects Fabrinet’s sales to grow by 8% in fiscal year 2024 to $2.865 billion and by 13% in 2025 to $3.249 billion, driven by increased business with Nvidia. They estimate Fabrinet’s revenue from Nvidia will rise from $990 million in 2024 to $1.4 billion in 2025, with further upside if Nvidia captures a larger share of the GPU transceiver market.
In a best-case scenario, the Nvidia-Fabrinet partnership could add an extra $1 billion in sales, translating into over $13 per share in EPS power for Fabrinet, though this growth would require significant manufacturing expansion.
