Merrill reiterates BUY- says near term ramp isues transitory
JBL reported an in-line Aug qtr and guided Nov below consensus (Figure 1) on
continued ramp of the iPhone in the DMS segment. We view the near term margin
weakness associated with the ramp as transitory and precipitated by the staggered
launch of incremental capacity, which should be resolved over the next two
quarters. We view the fastest growth in Jabil’s highest margin segment driving a
longer term positive mix shift and significant earnings growth. Reiterate Buy.
"the back half of the year looks very good"
By equityvaluation . Sep 26, 2012 12:12 AM . Permalink
"I think we’d get to margin expansion and accretion and EPS growth particularly in the back-half of the year. Okay, it’s unusual for a program to extend over two quarters; it’s not really six months. Jim, that’s really kind of an impact over a couple of quarters. I kind of ticked through the various elements of where you might expect us to be at revenue level of $4.33 billion in Q4 and where we ended up $10 million to $15 million in Specialized Services because of the ramp. $5 million negative mix shift, $5 million in poor profitability in Defense and Aerospace, in Clean Tech areas.
We think that meant we’ll see where the mix shift goes and we think over the course of Q1 and certainly Q2 we will hit targeted levels of efficiencies and quality in our Specialized Services Group. So we will look for a rebound in margin performance, particularly in Q2 through Q4"