UPDATE: JP Morgan Downgrades Fabrinet to Neutral on Valuation

JP Morgan reduced its rating on Fabrinet

from Overweight to Neutral with a reiterated $14 price target. JP Morgan said, "The stock traded up ~30% in the last five days (S&P 500 down 1%) following solid F1Q results and encouraging F2Q guidance that point to a near-complete operational recovery from the 2011 Thai floods. That said, results and guidance do not reflect stronger end-market demand for optical products, which make up nearly 70% of total revenue. In short, y/y growth through FY13 will be largely due to easier comparisons against the flood-impacted operations from one year ago. Without demand-led growth for this segment, we are hesitant to raise the multiple, and we therefore believe the stock is approaching fair value, being within 12% of our 2013 year-end Price Target of $14.00." Fabrinet closed at $12.48 on Wednesday.