The biggest loser on the NYSE on Tuesday came from a fiber-optics company. Fabrinet (NYSE: FN) saw its shares fall by almost 20 percent on Tuesday in response to an announcement that the company likely will disappoint analyst expectations going forward.
In a fiscal Q4 financial earnings report, Fabrinet reported that it had seen a net income of $33 million, or 88 cents per share, on overall sales of $405.1 million. While this is up from a year ago, where overall sales were at $345.3 million, it is still below what analysts were expecting for the company.
Making things worse, Fabrinet’s CEO said in a post-earnings conference call with analysts that timing changes to customer supply chains in regards to the restart of Huawei shipments will hurt some of the company’s optical communications business.
“These strong fourth quarter results also capped the best fiscal year in our history, as we generated record revenue, profitability and operating cash flows, on a full year basis,” said Fabrinet CEO Seamus Grady, emphasizing the positive figures despite falling below analyst expectations. “While we expect first quarter revenue and EPS to moderate from our record fourth quarter performance, we remain optimistic that our leadership as a trusted manufacturing partner positions us for continued success in fiscal 2020 and beyond.”
Around a month ago, JP Morgan began coverage on shares of Fabrinet, issuing a “neutral” rating on the stock in a research note that was published on July 29th. Analysts at the investment bank gave a “neutral” rating on the stock with a price target at $57 per share.
While this suggests that there is a 23 percent possible upside for the stock in the near future, it’s hard to tell whether or not Fabrinet is now a buy in light of today’s decline. Another investment firm, Zacks Investment Research, downgraded Fabrinet from a “buy” to a “neutral” earlier in May. Taking today’s decline into account, it’s hard to tell how much bullish pressure there is on the stock.
Shares of Fabrinet fell by 17.7 percent over the course of the day in response to the news. Over the past few months, shares have stayed relatively the same, although the stock has seen significant declines over short, multi-day periods.
Back in May, shares fell by around 20 percent over the course of a couple of days and while the stock has recovered since that decline, Fabrinet seems like a decent stock for short sellers hoping for future price plunges in the future.
Fabrinet Company Profile
Fabrinet is a United States-based company that is principally engaged in providing outsourced manufacturing services to original equipment manufacturers. These OEM customers are mainly companies in complex industries that require precision manufacturing capabilities.
The company offers a wide range of optical and electro-mechanical manufacturing capabilities across the whole producing process. It helps its customers to manufacture various products, such as selective switching products, active optical cables, tunable transponders and transceivers, lasers, and sensors. The company generates the majority of revenue from North America and Asia-Pacific, with the rest from Europe. – Warrior Trading News
