Jabil Circuit, Inc. JBL is reporting its third-quarter earnings on June 15, and RBC has said the main focus will be on the company's ability to sustain revenue growth if iPhone headwind persists.
RBC now expects third-quarter revenue/EPS at $4.14 billion/$0.14, which is slightly below Street of $4.18 billion/$0.16 and near the midpoint of guidance ($4.2 billion/$0.15).
The brokerage estimate DMS segment revenue to fall to $1.4 billion, down 12 percent, and EMS revenues to decline modestly to $2.7 billion, down 1 percent year-over-year.
Analyst Amit Daryanani said the quarter was marked by softer iPhone demand trends, modest operating leverage headwind across DMS segment, lower interest expense and EMS segment headwinds related to core storage revenue softness.
Daryanani noted investors should watch the company's potential to curtail capex and bolster FCF going forward, and levers/options in order to lower customer concentration and consumer-centric volatility.
"Intra-quarter, we broadly think EMS prints were in line to slightly below expectations. With aggregate results suggesting a slugging demand environment in core enterprise markets with pockets of growth in networking (more optical-centric)," Daryanani explained.
The analyst also highlighted that iPhone data points have been consistently negative from Apple Inc. AAPL's own June quarter guide to supply chain pointing toward an atmosphere of muted demand.
Daryanani, who maintains his Sector Perform rating and $21 target price, sees FY16 revenues/EPS of $18.3 billion/$2.09, slightly below the Street's expectations of $18.5 billion/$2.10.
At the time of writing, shares of Jabil Circuit were down 0.47 percent to $19.05.
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