UPDATE: Morgan Stanley Upgrades Fabrinet to Overweight

Morgan Stanley raises its rating on Fabrinet FN to Overweight from Underweight and increased its price target to $24 on raised estimates following a faster and more complete recovery from Thai floods, that could reinstate original margin levels. Morgan Stanley notes, "We had previously believed that FN was over-earning its business model and that post the Thai floods, pricing would get worse, customers would diversify away to other EMS players and margins would not get back to prior levels. However, after upsiding topline and margin on a much faster restoration of capacity, and after hearing testimonials that customers are in fact not leaving, we now believe gross margin can get very close to if not get all the way back to the 12.5% level it was 2 quarters ago. Our new CY13 EPS therefore goes to $1.93 from $0.88 previously leading our new price target of $24 at a 12x P/E, in-line w/ EMS peers. FN closed at $17.82 a share on Monday.