U.S. Markets closed

Stockbeat - Jabil Jumps on Earnings Joy, but Warns Outlook to Remain Jaded

Investing.com - Jabil Circuit soared Wednesday as its fiscal third-quarter revenue beat estimates and drew praise from Wall Street, though the chipmaker warned growth in the sector would continue to stutter.

Jabil Circuit (NYSE:JBL) said postmarket Tuesday it generated fiscal third-quarter earnings of to $0.57 in Q3, in line with guidance, but revenues of $6.14 billion topped expectations for $6.01 billion, sending its share price more than 10% higher on the day.

The revenue beat was led by new contract wins in its electronic manufacturing services segment and comes at a time when semiconductor companies continue to face headwinds on multiple fronts, including a slowdown in global smartphone markets.

Jabil offers design, manufacturing, supply chain and product management services for a wide array of industries.

CFRA, an independent research firm, raised its target on Jabil to $34 from $31 on expectations that free cash flows in 2020 could be propped up by lower interest expense and improved working capital.

Looking ahead, however, Jabil warned of continued weakness in semi-capital equipment, automotive and telecom services. The last group counts Apple (NASDAQ:AAPL) as a major customer, and Apple contributing nearly 28% to overall company sales.

Citigroup (NYSE:C) analyst Jim Suva wrote in a note that he is encouraged by the company's efforts, but added that disappointing Apple results or guidance could pressure Jabil.

The company guided fourth-quarter revenue in the range of $6.3 billion to $6.9 billion and adjusted earnings per share of $0.76 to $0.96, compared with estimates from Investing.com of $0.86 for EPS on revenue of $6.42 billion.

Related Articles

Netherlands stocks higher at close of trade; AEX up 0.22%

Britain's bankers call for more support, tax cuts after Brexit

'Sully' Sullenberger blasts U.S. aircraft certification process, says 737 MAX pilots need new simulator training