Rosenblatt has maintained its Buy recommendation and a $550.00 price target on Fabrinet (NYSE:FN) after the company released its fiscal 2026 second-quarter results and provided guidance for the third quarter. The stock is trading at $499.61, roughly 6% below Rosenblatt's target and close to its 52-week high of $531.22.
Analyst price targets on the shares span from $269 to $600, and the prevailing consensus indicates the stock is modestly overvalued relative to its Fair Value. Fabrinet delivered second-quarter revenue of $1.13 billion, an increase of 36% compared with the same quarter last year and 16% above the prior quarter. Non-GAAP earnings per share for the period were $3.36.
For the third quarter, Fabrinet's guidance points to revenue of about $1.18 billion and earnings per share of approximately $3.53 at the midpoint. On a trailing twelve-month basis the company recorded revenue of $3.59 billion, a near 20% rise year over year.
Independent financial analysis rates Fabrinet's overall financial health as "GREAT," reflecting solid composite performance across growth, profitability, and momentum measures. Yet the company operates with gross profit margins of 11.99%, which remain relatively thin and present an area for investors to monitor when assessing long-term profitability.
The Telecom business was a standout in the quarter. Telecom revenues reached $554 million, rising 17% sequentially and 59% from the year-ago quarter. Rosenblatt attributes that strength in part to market share gains with a key customer, Ciena.
High-performance computing demand also contributed meaningfully to growth. Revenues from orders associated with Amazon increased to $86 million in the second quarter, up from $15 million in the prior quarter.
Datacom sales totaled $278 million in the quarter. That segment showed only 2% sequential growth and a 7% decline year over year, as it continued to be affected by constrained supplies of lasers for its 200G-per-lane 800G and 1.6T transceivers produced for NVIDIA.
Rosenblatt expects Fabrinet's NVIDIA-related datacom revenue to expand sequentially following the addition of Lumentum as a second source for 200G EMLs. The analyst also observes that Fabrinet's precision optical packaging capabilities leave it well positioned to benefit from the industry's gradual move toward photonic integration.
The company's Q2 results exceeded consensus expectations on the bottom line. Fabrinet reported non-GAAP EPS of $3.36, beating a forecasted EPS of $3.25. These results underscore the company's ongoing momentum in the optical communications sector and attracted attention from analysts tracking the quarter.
Investors and market participants will likely weigh the tension between robust revenue growth and relatively compressed gross margins as they evaluate Fabrinet's earnings durability. While segment-level gains in Telecom and high-performance computing provide near-term growth drivers, the datacom segment's exposure to component supply limitations and margin pressure remain important considerations for assessing future cash flow and profitability.
Summary
Rosenblatt has reaffirmed a Buy rating and $550 price target on Fabrinet after the company reported $1.13 billion in Q2 revenue and $3.36 in non-GAAP EPS, and provided Q3 guidance for roughly $1.18 billion in revenue and about $3.53 EPS. Telecom and high-performance computing were key contributors to growth, while datacom faced laser supply constraints and the company continues to operate with thin gross profit margins.