Jabil Faces Bigger Challenges

Jabil Circuit, Inc. (JBL - Analyst Report) has been struggling to meet expectations in a slowing macroeconomic environment, and tight credit market. The company is experiencing falling demand, lower booking levels and declining margins.

Jabil's second-quarter revenue and earnings forecast are below Wall Street's expectations. Moreover, the near term risks of slowing end markets remain. Despite economic weakness, Jabil's strength in Mobility, and the Telecommunication helps improve its financial metrics. With flat revenue and profitability, we expect JBL to at least trade in-line with its peer group.

The company is currently trading at a P/E ratio of 6.5x our 2009 EPS estimate of $0.97, a discount to its industry mean, median, and S&P 500. We maintain our Hold rating on the stock with a reduced target price of $6.50, which reflects a multiple of 6.7x our reduced 2009 EPS.

Priyanka Poddar contributed to the report.

Read the full analyst report on JBL