Why Fabrinet Stock Leaped 8% Higher on Tuesday

Tuesday featured quite a memorable trading session for Fabrinet (NYSE: FN) stock. Shares of the optics equipment specialist added 8% to their value, on the back of a bullish initiation of coverage by an analyst. That rise trounced the gain of the S&P 500 index, which was a comparatively modest 0.2% on the day.

Convinced that it's a buy

The initiating individual was Fox Advisors pundit Steven Fox, who inaugurated his coverage of Fabrinet with an unhesitating outperform (buy, in other words) recommendation at a price target of $270 per share. At that level, Fox anticipates that the value of the shares could rise by over 12%.

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In their announcement that they had begun tracking Fabrinet, Fox and colleague Aneesha Patel wrote that the company "has proven to be the most consistent electronics manufacturing services (EMS) provider in the industry through an unwavering focus on building a leading supply chain position within highly attractive optical communications markets," since its founding quite some time ago in 2000.

Fabrinet is tethered to the optical segment, which is beneficial given its generally strong performance and bright future. Fox is estimating that optical equipment will comprise roughly 80% of Fabrinet's 2025 sales.

Joining the bull pen

Understandably, given its potential, Fabrinet is generally considered to be a solid company by analysts. They are collectively anticipating growth this year and next, with anticipated per-share earnings rising to $10.31 in 2025 from the previous year's $8.88, before a higher move to $11.64 for 2026.

They're also expecting increases for sales, which they feel will advance 17% this year to $3.39 billion and graduate to $3.83 billion in 2026.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.