Overview
Wolfe Research has raised its rating on Fabrinet (NYSE: FN) from Peerperform to Outperform and assigned a price target of $540.00, which the firm indicates equates to about 17% upside from the stock's current level of $460. Fabrinet carries a market capitalization of $16.2 billion and a bullish analyst consensus rating of 1.8.
Why Wolfe sees upside
The upgrade follows Wolfe Research's assessment of the data center ecosystem, where the firm says operators are actively diversifying and scaling their supplier bases. Wolfe characterised the sector as suffering from acute capacity limits, noting industry participants "can’t build it fast enough" and describing the situation as a "pig through a python problem."
Those supply-demand dynamics, Wolfe argues, create "a great environment for Fabrinet." The research team pointed to meaningful avenues for business growth that could flow to Fabrinet, including from sources "that might not seem obvious right now," as hyperscale and enterprise data center demand expands.
Company profile in this context
Fabrinet is a supplier focused on optical packaging and precision optical, electro-mechanical, and electronic components. In Wolfe's view, the company's capabilities and positioning align with the needs of data center customers who are working to broaden and accelerate their sourcing amid constrained capacity.
Recent financials and other analyst views
Fabrinet reported strong results for the second quarter of fiscal 2026, with revenues of $1.13 billion, a 36% increase year-over-year and a 16% sequential rise. Reported earnings per share were $3.36, above the $3.25 expected. For the third quarter, Fabrinet provided guidance centered on approximately $1.18 billion in revenue and about $3.53 in earnings per share at the midpoint.
Separately, Rosenblatt maintained its Buy rating on Fabrinet and left its price target at $550, reflecting continued confidence in the company’s growth trajectory. Together, the upgrade by Wolfe and Rosenblatt’s reiteration underscore investor and analyst attention on Fabrinet amid robust data center demand.
Implications
The combination of an analyst upgrade, recent outperformance in quarterly results, and explicit forward guidance highlights the market opportunity Fabrinet faces as data center operators contend with capacity shortages and seek to diversify their supply chains.