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On Tuesday, Rosenblatt Securities analyst Mike Genovese increased the price target on Fabrinet (NYSE:FN) stock to $285 from the previous $280 while maintaining a Buy rating. The stock, which has gained an impressive 9.1% in the past week according to InvestingPro data, currently trades at $225.60. The adjustment follows Fabrinet’s confirmation that customer order patterns have remained stable despite the introduction of the new DeepSeek technology.
Genovese expressed confidence in Fabrinet’s potential to recover market share in the high-speed Datacom sector as the 1.6T technology is deployed. The company’s strong financial health, rated as "GREAT" by InvestingPro, supports this growth trajectory. Sales of 1.6T are expected to be propelled by Blackwell, and the analyst anticipates some initial bundling of computing and networking solutions during Blackwell’s initial market entry.
The analyst also highlighted that a significant portion of Fabrinet’s growth in the Telecom (BCBA:TECO2m) segment is attributed to Data Center Interconnect (DCI), including ZR technology. Genovese pointed out that DCI should be considered a part of the AI market, suggesting a broader market influence.
In light of these observations, Rosenblatt Securities has revised upward the financial estimates for Fabrinet. The new price target of $285 is based on a multiple of 25 times the projected earnings per share (EPS) for the fiscal year 2026. With current revenue growth of 12.2% and analyst targets ranging from $178 to $300, Fabrinet’s management’s outlook and the expected industry trends have contributed to this positive assessment of the company’s financial prospects. For deeper insights into Fabrinet’s valuation and growth potential, including exclusive financial health scores and detailed analysis, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Fabrinet has reported positive results for its fiscal second quarter, along with a promising outlook for the third quarter. The optical manufacturing services provider reported adjusted earnings per share of $2.61 for Q2, surpassing the consensus estimate of $2.50. Revenue was also impressive, coming in at $833.6 million, a 17% YoY increase and exceeding expectations of $813.86 million.
Fabrinet’s guidance for the third quarter is also upbeat, forecasting an adjusted EPS of $2.55-$2.63 and revenue of $850-870 million, both projections ahead of analyst consensus. The company’s CEO, Seamus Grady, noted a strong performance in telecom, driven by an increasing demand for datacenter interconnect products and recent systems wins.
Despite a slight moderation in datacom demand, the company expects more rapid growth as next-generation products ramp up production. Adding to these recent developments, Fabrinet’s board has approved an expansion of its share repurchase program, authorizing up to an additional $100 million in buybacks.
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