Analysts' reports: Bullish on Jabil, bearish on Amazon
Seven analysts emphasize their bullish stance on electronics and circuit board contract manufacturer Jabil Circuit, boosting the stock slightly in midday trading.
The broker reports were a reaction to the St. Petersburg, Fla.-based company's fourth-quarter earnings announcement yesterday. Jabil executives said quarterly profit more than doubled as sales climbed 77 percent.
Net income for the quarter ended Aug. 31 jumped to $47.1 million, or 24 cents a share, from $20.2 million, or 11 cents a share, in the same period last year. Revenue increased to $1.07 billion from $602.3 million.
The results met the 24-cent average estimate of analysts polled by First Call/Thomson Financial.
Jabil credited booming sales of cell phones, set-top boxes and other communications-related products for the profit and revenue surge. Sales of communications-related goods spiked 18 percent from the third quarter and are expected to comprise 50 percent of sales during the next fiscal year, up from 44 percent this year.
Sales are expected to rise about 50 percent to about $5.3 billion in fiscal 2001 from $3.6 billion this year, chief financial officer Chris Lewis said yesterday.
Also in the fourth quarter, Jabil won contracts with network-equipment makers Redback Networks, Sycamore Networks and Adtran. Cisco Systems accounted for 20 percent of Jabil's 2000 sales, followed by Dell Computer at 16 percent and Hewlett-Packard at 14 percent.
As a result, Wit SoundView analyst Thomas Cal reiterated his "strong buy" position and raised his price target to $85 from $66. Lehman Brothers analyst Louis R. Miscioscia reiterated his "buy" rating and raised his target price to $72 from $60 per share.
Needham analyst John J. McManus reiterated a "strong buy" and raised his target price to $75 from $72 per share. UBS Warburg analyst Scott Heritage maintained his "strong buy" rating and boosted his 12-month target price to $74 from $60 per share.
Dain Rauscher Wessels and Thomas Weisel Partners also reiterated favorable ratings today. Price targets of the seven brokers who issued Jabil reports today ranged from $60 to $80.
Jabil shares were trading at $62.31 per share in morning trading today, up 3.3 percent from yesterday's close. The company's 52-week high is $68.
Brokers were not quite as bullish on online retailer Amazon.com.
CEO Jeff Bezos said yesterday at an industry conference that he expects the company to meet projected 50 percent annual growth in online sales through 2010.
Bezos and other executives also said that roughly one-third of the company's 23 million customers are not aware of the company's non-book offerings, such as home-improvement goods, toys and cooking products. The company said it has to boost marketing efforts to increase sales in those stores.
But the profitless company is under pressure from Wall Street to rein in costs. At yesterday's conference in Reno, Nev., Amazon executives emphasized their plan to reach profitability by taking advantage of existing assets and cutting back on growth and costs, including marketing.
Shares of Seattle-based Amazon fell today after analysts who attended the conference issued skeptical reports on the company.
The company's stock fell $2.38, or almost 6 percent, to $38.38 in late morning trading. The stock has traded as high as $113 this year and as low as $27.87.