On Thursday, Stifel analyst Matthew Sheerin updated Jabil Inc's (NYSE:JBL) stock price target to $160 from $150, while maintaining a Buy rating on the shares.
According to InvestingPro data, the stock is currently trading near its Fair Value, with a P/E ratio of 12.4x and strong financial health metrics. The adjustment follows Jabil's impressive fiscal first quarter performance, where the company's sales and earnings per share (EPS) exceeded Stifel's projections by $390 million and $0.13, respectively.
Jabil reported a modest year-over-year sales growth of approximately 1%, after accounting for a $1.45 billion year-over-year impact from the divestiture of its mobility business.
The growth was attributed to strong performance in cloud and data center infrastructure, driven by artificial intelligence (AI), and a rebound in the semiconductor capital equipment (semi-cap) sector. InvestingPro analysis shows the company maintains a solid current ratio of 1.09 and operates with a moderate debt level, supporting its strategic initiatives.
The company has also updated its fiscal year 2025 outlook for its Cloud and Data Center Infrastructure (DCI) segment, increasing it by $400 million to $5.5 billion. This revision is largely due to additional program wins with its largest customer, Amazon (NASDAQ:AMZN) Web Services (AWS).
Despite these positive developments, Jabil's overall fiscal year 2025 sales and EPS guidance was raised only modestly—by about $300 million and 10 cents—owing to persistent challenges in the electric vehicles (EVs) and renewables sectors, which are expected to account for roughly 24% of its FY25 sales forecast.
Jabil's strong cash flow generation was highlighted, with free cash flow (FCF) reaching $226 million, marking a 31% year-over-year increase. The company remains on track to achieve its target of approximately $1.2 billion in FCF by fiscal year 2025.
In light of these factors, Sheerin has increased the price target to $160, which reflects around 16 times Stifel's fiscal year 2026 EPS estimate of $10.20 for Jabil. The stock has shown impressive momentum, delivering a 7.5% return in the past week and maintaining dividend payments for 19 consecutive years.
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