Fabrinet (NYSE:FN) is one of the AI Stocks Analysts Say You Shouldn’t Ignore. On August 25, JPMorgan analyst Samik Chatterjee upgraded the stock from Neutral to Overweight with a price target of $345.00 (from $318.00).
The firm has upgraded the stock citing robust “longer-term drivers for optical companies with leverage to multi-faceted investment.” Analysts are also optimistic that the recent shares pull-back offers a lucrative opportunity for investors to “participate in the upside.”
The stock experienced a pull-back because of investors hoping for faster growth with customers, but short term supply shortages slowed things down. However, the firm highlighted several catalysts that are working in favor of the stock, such as program ramps with customers such as Nvidia’s 1.6T opportunity, Ciena’s modem opportunity, and Amazon’s HPC opportunity.
“Following the recent pull-back, Fabrinet shares are now trading closer to ~24x NTM consensus earnings, which is significantly lower than the nearly 30x it was trading at prior to the latest earnings report, and the market is now underappreciating the proximity of large concurrent program ramps with prominent customers, including: 1) Nvidia: The 1.6T opportunity is forecasted to represent a $1.5 bn market opportunity in CY26 and could double thereafter; 2) Ciena: The modem opportunity is expected to start generating material revenue in CY26 and we estimate should exceed the historical revenue of Infinera at full run- rate, given its at least 2x greater scale (Infinera revenue recently reached ~$330 mn in FY23);”
