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Fabrinet (FN)
NYSE:FN
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Fabrinet (FN) AI Stock Analysis

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FN

Fabrinet

(NYSE:FN)

Rating:81Outperform
Price Target:
$356.00
▲(15.25%Upside)
Fabrinet's overall stock score is driven by strong financial performance and positive earnings call highlights, including robust sector growth and strategic partnerships. Technical indicators suggest current overbought conditions, and valuation metrics indicate potential overvaluation, which are factors to watch.
Positive Factors
Earnings
FN results exceeded expectations with significant growth driven by the Telecom segment.
Growth Strategy
Management remains committed to its massive Building 10 capacity expansion to meet anticipated demand.
New Contracts
The new Amazon contract is expected to have a material impact.
Negative Factors
Performance Issues
Datacom disappointed again likely due to NVDA share loss at 800G to aggressive industry pricing.
Product Launch Risks
Datacom segment struggled with a decline in performance ahead of new product launches.

Fabrinet (FN) vs. SPDR S&P 500 ETF (SPY)

Fabrinet Business Overview & Revenue Model

Company DescriptionFabrinet (FN) is a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services. The company operates in the technology and telecommunications sectors, specializing in engineering and manufacturing services for original equipment manufacturers (OEMs) of complex products such as optical communications components, modules, and sub-systems. Fabrinet serves a diverse range of markets including data communications, telecommunications, and industrial and automotive applications.
How the Company Makes MoneyFabrinet makes money primarily through its contract manufacturing services. The company generates revenue by providing high-precision manufacturing services to OEMs, who outsource their manufacturing needs to Fabrinet to benefit from its expertise in optical and electro-mechanical assembly. Key revenue streams include the production of optical communication products, which are crucial for data transmission and telecommunications networks. Fabrinet's partnerships with leading technology companies ensure a steady demand for its services. Additionally, the company benefits from long-term contracts and repeat business due to the high cost and complexity of switching manufacturing partners, which contributes significantly to its earnings.

Fabrinet Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q3-2025)
|
% Change Since: 39.83%|
Next Earnings Date:Aug 25, 2025
Earnings Call Sentiment Positive
Fabrinet's Q3 FY2025 earnings call highlighted strong overall performance with significant revenue growth, especially in the telecom and automotive sectors, and a promising new partnership with Amazon. However, challenges in the Datacom segment and short-term margin pressure due to new product ramps were noted.
Q3-2025 Updates
Positive Updates
Strong Revenue Performance
Fabrinet reported a revenue of $872 million for Q3 FY2025, exceeding guidance and marking a 19% increase from a year ago and a 5% increase from Q2.
Telecom Revenue Growth
Telecom revenue surged by 42% year-over-year and 17% from Q2, driven by new system wins and 400ZR momentum.
Automotive and Industrial Laser Growth
Automotive revenue increased by 76% year-over-year and 24% from Q2, while Industrial Laser revenue grew by 33% year-over-year and 8% sequentially.
New Amazon Partnership
Fabrinet announced a new commercial relationship with Amazon Web Services, which includes a multi-year agreement and a warrant purchase agreement for up to 1% of outstanding shares.
Share Repurchase Activity
Fabrinet repurchased over $100 million worth of shares so far this fiscal year, demonstrating confidence in the company's future.
Negative Updates
Datacom Revenue Decline
Datacom revenue decreased by 18% year-over-year and 16% from Q2 due to product transitions at a large customer and demand fluctuations.
Gross Margin Impact
Gross margin was affected by a $4 million contra-revenue impact from the Amazon warrant, resulting in a 40 basis point decline.
Short-term Margin Headwinds
Fabrinet faces short-term margin headwinds due to new product ramps and startup costs, although these are expected to be temporary.
Company Guidance
During the third quarter of fiscal year 2025, Fabrinet provided guidance indicating strong financial performance, with revenue reaching $872 million, surpassing their guidance range. The company reported non-GAAP earnings per share of $2.52, also exceeding expectations. Telecom revenue experienced significant growth, increasing by 42% year-over-year and 17% from the previous quarter, driven by robust data center interconnect demand and system wins. Conversely, Datacom revenue saw a decline due to product transitions at a major customer, but Fabrinet remains optimistic about future growth driven by the anticipated ramp-up of 1.6T devices. Non-Optical Communications revenue grew by 53% year-over-year, with automotive revenue up 76% year-over-year. Looking ahead, Fabrinet expects fourth-quarter revenue to be between $860 million and $900 million and earnings per share between $2.55 and $2.70, despite some anticipated short-term margin pressures due to new product ramps.

Fabrinet Financial Statement Overview

Summary
Fabrinet demonstrates strong financial health with robust revenue growth, solid profit margins, low leverage, and effective cash flow management. Minor concerns include increased capital expenditures affecting free cash flow growth.
Income Statement
92
Very Positive
Fabrinet exhibits strong revenue growth with a TTM (Trailing-Twelve-Months) total revenue increase from previous years. Gross profit margin and net profit margin have remained robust, demonstrating effective cost control and profitability. The EBIT and EBITDA margins are healthy, indicating solid operational efficiency.
Balance Sheet
87
Very Positive
The company maintains a low debt-to-equity ratio, suggesting prudent financial leverage and strong equity position. Return on equity is impressive, reflecting efficient use of shareholders' funds to generate profit. The equity ratio is solid, indicating a stable capital structure with a significant portion of assets financed by equity.
Cash Flow
85
Very Positive
Operating cash flow is strong relative to net income, indicating good cash conversion. However, the free cash flow growth rate is negative, reflecting higher capital expenditures. The free cash flow to net income ratio remains positive, showing the company can generate cash beyond its net income.
BreakdownJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income Statement
Total Revenue2.88B2.65B2.26B1.88B1.64B
Gross Profit356.12M336.27M278.59M221.36M186.10M
EBITDA326.01M304.81M245.20M187.05M152.12M
Net Income296.18M247.91M200.38M148.34M113.48M
Balance Sheet
Total Assets2.34B1.98B1.84B1.62B1.38B
Cash, Cash Equivalents and Short-Term Investments858.60M550.47M478.15M547.93M488.12M
Total Debt4.99M13.42M31.24M45.96M59.52M
Total Liabilities592.77M510.99M581.96M503.60M407.57M
Stockholders Equity1.75B1.47B1.25B1.11B974.41M
Cash Flow
Free Cash Flow365.62M151.04M33.66M74.18M107.15M
Operating Cash Flow413.15M213.31M124.25M118.67M150.66M
Investing Cash Flow-169.75M-98.72M-135.54M-5.44M-71.25M
Financing Cash Flow-64.85M-80.98M-92.93M-42.75M-35.30M

Fabrinet Technical Analysis

Technical Analysis Sentiment
Positive
Last Price308.89
Price Trends
50DMA
265.63
Positive
100DMA
233.42
Positive
200DMA
233.76
Positive
Market Momentum
MACD
12.00
Positive
RSI
67.32
Neutral
STOCH
69.13
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FN, the sentiment is Positive. The current price of 308.89 is above the 20-day moving average (MA) of 297.29, above the 50-day MA of 265.63, and above the 200-day MA of 233.76, indicating a bullish trend. The MACD of 12.00 indicates Positive momentum. The RSI at 67.32 is Neutral, neither overbought nor oversold. The STOCH value of 69.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FN.

Fabrinet Risk Analysis

Fabrinet disclosed 41 risk factors in its most recent earnings report. Fabrinet reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Fabrinet Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$11.07B34.4318.30%17.14%18.90%
77
Outperform
$5.27B22.8111.03%-1.50%1.84%
74
Outperform
$6.20B24.7917.73%7.10%58.52%
74
Outperform
$6.67B29.659.50%0.88%-1.14%
73
Outperform
$15.57B1.25%21.68%92.07%
68
Neutral
$3.34B20.9712.12%2.31%48.63%
63
Neutral
S$646.40M16.170.69%3.51%-0.63%-32.22%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FN
Fabrinet
308.89
88.99
40.47%
COHR
Coherent Corp
100.14
30.93
44.69%
ITRI
Itron
135.97
32.14
30.95%
MKSI
MKS
99.50
-22.96
-18.75%
PLXS
Plexus
123.25
-3.12
-2.47%
SANM
Sanmina-Sci
98.58
23.62
31.51%

Fabrinet Corporate Events

Executive/Board ChangesShareholder Meetings
Fabrinet Director Rollance Olson Announces Retirement
Neutral
May 27, 2025

On May 22, 2025, Rollance Olson informed Fabrinet‘s board of directors of his decision to retire and not seek re-election at the 2025 annual general meeting. His retirement was not due to any disagreements with the company’s operations, policies, or practices.

The most recent analyst rating on (FN) stock is a Hold with a $230.00 price target. To see the full list of analyst forecasts on Fabrinet stock, see the FN Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 18, 2025