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Jabil (JBL) Earnings Preview

by | Sep 25, 2021

Jabil (JBL) options unusually active recently ahead of earnings on 9/29 before the open with buyers of 3,000 October $65 calls on 9/20 and many spread with the $70 calls. This follows buyers of 1,485 December $70 calls on 8/30. On 9/24, the October $60 puts were sold to open 1000X. Shares have traded higher in each of the last nine reports with an average closing move of 6.15% and a max move of 10.25%. The current implied move is 6.15%. Shares are sitting just below new highs at $63.85, and a breakout move targets $68-$70, so the October $65/$70 call spread at $1.05 feels like an attractive position for a breakout run. JBL is expecting $1.38 on $7.67B in sales, up 5% Y/Y. Next quarter is guided to $1.75/$8.25B and the FY is $5.55/$29.55B. The $9.38B company trades 10.4X earnings, 0.32X sales, and 7.5X cash with a small yield. Jabil is a manufacturing services company with digital prototyping, printed electronics, device integration, circuit designing, and volume board assembly services. They have a broad end-market exposure from automotive and healthcare to data centers and aerospace. They are integrally tied to Apple as they make encasements for the company’s iPhones and iPads. They have also expanded into the Watch in recent years and now about one fifth of all sales. JBL is also benefitting from growth in 5G infrastructure and cloud adoption which is moving more customers towards designing test capabilities and utilizing JBL’s services.  The biggest risk to the quarter remains supply chain disruptions to guidance but overall demand should remain solid. Analysts have an average target for shares for $57 with a Street High $80. Citi positive on 9/24 noting that the newly launched iPhone models, Apple Watch, iPad, and AirTags could give Jabil a nice boost as Apple accounts for 20% of its total sales. Hedge fund ownership was flat in Q3.

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