Zacks Investment Research downgraded shares of Jabil Circuit Inc. (JBL) from NEUTRAL to UNDERPERFORM on December 13, 2013, with a target price of $17.00.
Jabil Inc. reported better-than-expected fourth-quarter results with both earnings and revenues beating the Zacks Consensus Estimate. However, management provided cautious first-quarter guidance. Jabil's increasing association with Apple is expected to boost its growth prospects. Additionally, estimated strong growth from the Nypro acquisition, restructuring benefits and new customer wins will boost Jabil's competitive position in the long run. Nonetheless, we believe that the weak first-quarter revenue guidance and lowered earnings outlook for fiscal 2014 will remain an overhang on the stock. The disengagement with BlackBerry is expected to negatively impact top line and margins over the next couple of quarters. Moreover, the company will continue to face macroeconomic headwinds in the near term. As the company continues to invest in the diversified manufacturing segment, it will increase capital expenditure, thereby hurting profitability. Thus, we downgrade our recommendation from Neutral to Underperform and set a price target of $17.00.
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