UPDATE: Piper Jaffray Upgrades Fabrinet to Overweight on Carrier Capital Spending Outlook

Piper Jaffray upgraded Fabrinet

from Neutral to Overweight and raised the price target from $14.00 to $16.50. Piper Jaffray noted, "We believe FN is in closer proximity to growth in carrier capital spending and the 100G upgrade cycle, justifying a higher valuation multiple to reflect the firm's strong position at the beginning of a positive demand cycle. … [C]arrier capex as a percentage of sales tends to increase with sales growth, in which context a baseline assumption of 1.5% increase in carrier revenue yields a 4% increase in carrier capex. We think FN is an indirect beneficiary of this positive inflection point." Fabrinet closed at $13.34 on Thursday.