Fabrinet: Achieving Record Revenue and Growth Amidst Price Collapse.

Fabrinet has reported record revenue and strong growth, but its stock price has collapsed. The company has a higher valuation than the past five-year average, but growth and momentum justify it.

Fabrinet (FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services, reported its fourth-quarter (Q4) financial results on July 2, 2025. The company exceeded analysts' expectations with record revenues and earnings, but shares fell 11% premarket due to concerns over supply chain constraints in its data communication business [1].

Fabrinet's Q4 results showed record quarterly revenue of $910 million, exceeding the company's guidance range. Non-GAAP net income per diluted share reached a new all-time high of $2.65. For the full fiscal year 2025, Fabrinet achieved record revenue of $3.4 billion, a 19% increase year-over-year. The company's guidance for the first fiscal quarter (Q1) 2026 also exceeded expectations, with revenue expected to be in the range of $910 million to $950 million [1].

However, Fabrinet's shares fell 11% premarket after Needham analysts noted a slowdown in the data communication business segment due to supply chain constraints. The company's Chief Financial Officer, Csaba Sverha, cited supply constraints for critical components as the cause of the anticipated drop in Datacom revenue in Q1. Sverha stated that the company is working with customers and suppliers to resolve these issues, which are expected to be temporary [1].

Despite the supply chain concerns, Fabrinet maintained its Buy rating and $350 price target, according to Needham analysts. The analysts noted that Fabrinet's strong Q4 results and guidance for Q1 2026 indicate continued growth in the company's optical communications, automotive, and industrial lasers and sensors markets [1].

Fabrinet's earnings call provided further insights. The company reported $910 million in Q4 revenue, up 20% YoY, with non-GAAP earnings reaching $2.65 per share. The growth was driven by strong performance in optical communications and the ramp-up of a new telecom system program. Datacom revenue fell 12% YoY to $277 million but rose 10% sequentially, hindered by component shortages despite strong 1.6T product demand. Telecom revenue surged 46% YoY to $689 million, fueled by data center interconnect (DCI) demand. Automotive revenue stabilized at $128 million with minor sequential decline, while industrial lasers maintained $40 million consistency amid sector volatility [2].

The company also announced a significant partnership with Amazon Web Services, which is expected to be a meaningful revenue driver in fiscal year 2026. CEO Seamus Grady highlighted the successful navigation of a major datacom customer’s product transition and record highs in the telecom segment [3].

While Fabrinet’s outlook remains positive, the company expects temporary margin pressure due to annual merit increases and new product ramp inefficiencies. Component supply challenges are also expected to be a headwind in Q1 [3].

Analysts’ consensus rating for Fabrinet is Moderate Buy, based on four Buy and two Hold ratings over the past three months. With that comes an average FN price target of $334.80, representing a potential 2.35% upside for the shares [1].

References:
[1] https://www.tipranks.com/news/fn-earnings-fabrinet-stock-sinks-despite-q4-beats
[2] https://www.ainvest.com/news/fabrinet-q4-2025-earnings-call-key-contradictions-datacom-telecom-revenue-projections-2508/
[3] https://seekingalpha.com/news/4486773-fabrinet-outlines-910m-950m-q1-revenue-target-as-growth-accelerates-with-aws-partnership-and