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BofA Securities raised its price target on Jabil (NYSE:JBL) to $225 from $180 on Wednesday, while maintaining a Buy rating on the stock. The increase follows Jabil’s strong fiscal third-quarter performance and raised guidance for fiscal year 2025. The stock, now valued at $21.14 billion by market cap, has delivered impressive returns with a 56% gain over the past year. According to InvestingPro, three analysts have recently revised their earnings estimates upward for the upcoming period.
The company has increased its artificial intelligence-related revenue forecast to $8.5 billion for fiscal 2025, representing over 50% year-over-year growth, up from its previous estimate of $7.5 billion. BofA expects this AI revenue strength to continue into fiscal 2026, though it assumes a more conservative growth rate of 25% year-over-year. This growth trajectory comes as Jabil maintains strong overall revenues of $28.51 billion in the last twelve months, though InvestingPro analysis suggests the stock is currently trading above its Fair Value.
Cloud and data center infrastructure revenues remained robust, including demand for custom-ASIC servers. Photonics represents another growth avenue, with revenues expected to increase from $300-400 million in fiscal 2025 to $750 million in fiscal 2026, and potentially exceeding $1 billion in subsequent years.
BofA projects operating margins to grow over the next few years as capacity utilization improves, citing better cost control and improved product mix. The firm models operating margin growing 20 basis points year-over-year to 5.6% in fiscal 2026 from 5.4% in fiscal 2025, with a potential path to exceeding 6.0% in fiscal 2027/2028. Currently, Jabil operates with a gross profit margin of 8.86%, which InvestingPro identifies as relatively modest for the sector. For deeper insights into Jabil’s financial health and detailed margin analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The healthcare segment’s margins are currently impacted by underutilization of Jabil’s Croatia facility, which BofA expects to improve by the end of fiscal 2026 or fiscal 2027 with GLP-1 drug delivery-related production.
In other recent news, Jabil has reported impressive financial results for its third fiscal quarter of 2025, surpassing both earnings and revenue expectations. The company achieved an earnings per share of $2.55, outperforming the forecasted $2.29, while its revenue reached $7.8 billion, exceeding the anticipated $7.03 billion. Jabil has also raised its full-year revenue guidance to approximately $29 billion, driven by strong demand in AI-related markets. Barclays (LON:BARC) and UBS have responded positively to these developments, with Barclays raising its price target for Jabil to $223 and UBS increasing its target to $208, citing robust growth in the company’s Cloud and Data Center segments. Jabil has further announced plans to establish a new U.S. manufacturing site to support its Cloud and Data Center operations, reflecting its commitment to expanding capabilities in these areas. Despite challenges in the Electric Vehicle, Renewables, and 5G sectors, Jabil’s healthcare segment continues to perform well. The company remains focused on leveraging its diversified portfolio and strategic investments in AI to sustain growth.
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