Fabrinet (FN) Stock Forecast & Price Target

Fabrinet reported a notable growth in its Telecom segment, which accounts for 42% of total revenue, achieving a 24% year-over-year increase and reaching $348 million, driven by a strong ramp in 400ZR shipments. The company's operating cash flow improved significantly, climbing to $116 million in F2Q25, marking a substantial increase from both the prior quarter and year. Furthermore, Fabrinet's strategic integration of optic component production with systems production has attracted new customers, enhancing cost efficiency and performance, and there is an anticipated recovery in Datacom growth linked to upcoming product launches.

Fabrinet is projecting total revenue between $850 million and $870 million, which exceeds consensus expectations of $825 million, yet this positive outlook is contrasted by anticipated declines in datacom revenue due to a significant product transition by a key customer, NVIDIA. Furthermore, the company is facing pressures from pricing dynamics and challenges in achieving productivity gains, which could adversely impact profitability if unfavorable conditions persist. Lastly, the necessity to account for $4.2 million in contra-revenues stemming from in-the-money warrants has led to expectations of lower earnings per share (EPS) guidance, further complicating the financial outlook for Fabrinet.