Fabrinet (FN) Stock Forecast & Price Target

Fabrinet's strong performance is highlighted by a 59% year-over-year growth in telecom sales, with quarterly revenue reaching $505 million, driven significantly by the demand for 400G/800G ZR shipments and contributions from Ciena's new WaveLogic program. The company's overall revenues for the first quarter of fiscal 2026 totaled $978 million, exceeding expectations by approximately $50 million, and marking a 22% year-over-year increase. Further bolstering its growth outlook, Fabrinet is expected to enhance its production capacity with over $2 billion coming online by the end of fiscal 2026, suggesting continued momentum in customer integration and operational scale.

Fabrinet's recent financial reports indicate a concerning trend, with Datacom revenues showing a 1% quarterly decline and a significant 17% year-over-year decrease, suggesting challenges in demand or supply chain disruptions, particularly related to laser availability. Gross margins have also contracted to 12.3%, down 30 basis points quarter-over-quarter and 40 basis points year-over-year, falling short of estimates due to foreign exchange headwinds and increased operational costs. The ongoing pricing pressures combined with supply chain uncertainties pose substantial risks to the company's profitability, particularly if they are unable to achieve necessary productivity gains or fulfill timely orders to suppliers, potentially leading to lost revenues and diminished market share.