Jabil Circuit Ests Lowered

We maintain our Hold rating on the shares of Jabil Circuit, Inc. (JBL - Analyst Report). Although Jabil has been showing signs of improvement from restructuring activities, the near-term risks of a slowing end-market remain. Moreover, the company's restructuring efforts are expected to impede margins.

Jabil reported a soft first quarter of 2009, hit by the deteriorating economic conditions. The company provided a cautious guidance for its second quarter, well below consensus expectations. We have therefore lowered our estimates for the second quarter of 2009 as well as for the full year 2009. However, given improvements in JBL's operations and new business wins, we do believe that the stock should trade in-line with the industry median.

The company is currently trading at a P/E ratio of 8.1x our reduced 2009 EPS estimate of $0.81, a discount to its industry mean. Our reduced target price of $7.00 reflects a multiple of 8.7x our reduced 2009 EPS.

Priyanka Poddar contributed to the report.

Read the full analyst report on JBL