Assessing Fabrinet (FN) Valuation After Strong Earnings And AI Data Center Growth Guidance

Fabrinet (FN) shares have been in focus after the company reported second quarter results, issued third quarter guidance, and updated investors on the completion of a long running share repurchase program.

See our latest analysis for Fabrinet.

The latest quarterly earnings and guidance appear to be the key driver behind Fabrinet’s 7.25% 1 day share price return. Its 90 day share price return of 18.94% and very large 5 year total shareholder return of 462.23% point to momentum that has built over time.

If Fabrinet’s AI data center exposure has caught your attention, it may be worth broadening your watchlist with our screener of 34 AI infrastructure stocks as a starting set of ideas.

With the stock at $495.55 after a strong run and analysts’ average price target sitting at $517.40, along with a long-running buyback now complete, the question is simple: Is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 1% Overvalued

Fabrinet’s last close at $495.55 sits slightly above the most followed narrative fair value of about $492.67, so the current price is close to that framework but a touch richer.

The decision to accelerate capacity expansion (Building 10) due to robust customer demand and new program ramps positions Fabrinet to capture additional large-scale opportunities in AI infrastructure and next-gen telecom. This may support both sustained revenue growth and operating leverage as fixed costs are spread over higher output.

Read the complete narrative.

Curious what kind of revenue path, margin lift, and future earnings multiple are baked into that fair value estimate, and how much buybacks shape the outcome? The full narrative lays out the exact growth profile and profitability mix that underpin the $492.67 figure and the small premium implied at today’s price.

Result: Fair Value of $492.67 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, customer concentration around NVIDIA and Cisco, along with ongoing component bottlenecks in high demand transceivers, could quickly challenge the growth and margin story that investors are watching.

Find out about the key risks to this Fabrinet narrative.

Build Your Own Fabrinet Narrative

If you are not fully aligned with this view or prefer to test the numbers yourself, you can build a custom thesis in minutes with Do it your way.

A great starting point for your Fabrinet research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If Fabrinet sparked your interest, do not stop there. Broaden your opportunity set with focused stock ideas pulled directly from the Simply Wall St screener.

• Explore income potential with companies that currently pay higher yields by reviewing our list of 12 dividend fortresses and see which ones align with your goals.
• Search for quality at a reasonable price by scanning through 53 high quality undervalued stocks that combine solid fundamentals with prices that may not fully reflect them.
• Focus on capital preservation by reviewing 85 resilient stocks with low risk scores that score well on our risk checks before sentiment or headlines catch up.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com