Jabil Positioned For 'Years' Of Growth, Argus Says

Close on heels of the Thursday release of Jabil Inc JBL's fiscal first quarter results, an Argus analyst is expressing optimism about the electronic manufacturing services, or EMS, company.

The Analyst

Argus analyst Jim Kelleher upgraded shares of Jabil Circuit from Hold to Buy with a 12-month price target of $36.

The Thesis

Jabil's Q1 results demonstrated the company's solid execution amid Apple Inc. AAPL‘s launch and ramp of multiple phones, Kelleher said in a Monday note. (See Kelleher's track record here.) 

Jabil delivered mid-single digit growth in the traditional EMS business, while also growing its higher-value-added diversified manufacturing services, or DMS, business in the low double digits, Kelleher said. 

"We believe Jabil has moved beyond past execution stumbles and is now positioned for multiple years of peer-leading top-line growth and margins expansion," the analyst said. 

The three-year framework Jabil has set for growth in revenue, core earnings per share and cash flow from operations signals continued growth for its key customer Apple, Kelleher said — and ongoing strength in health care, packaging and the Greenpoint business.

Jabil's shares are attractively valued at current levels despite its peer-leading performance, according to Argus. 

The Price Action

Jabil Circuit shares have gained about 18 percent year-to-date. 

At the time of writing, the shares of the company were slipping 2.10 percent at $27.28. 

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