Why Fabrinet Stock Jumped Today

Markets Motley Fool

What happened

Continue Reading Below

Shares of Fabrinet (NYSE: FN) were soaring today after the optical communications services specialist received a bullish analyst note and a price hike.

The stock closed up 15.5%.

So what 

Needham & Company analyst Alex Henderson lifted his price target from $56 to $60 and maintained his "strong buy" rating after meeting with Fabrinet management for two days. Henderson was particularly excited about new customers Tesla Motors and Amazon.com, whose cloud-computing division is set to become a customer of Fabrinet. 

Henderson went on to say that Tesla and Amazon alone should drive 10% revenue growth next year, and projected the company's overall revenue growth around 20% next year.

Continue Reading Below

Now what

It's easy to why landing Tesla and Amazon as clients led to a bullish analyst recommendation and a surge in the stock. Those are two of the fastest-growing and most disruptive companies today. Despite still manufacturing relatively few cars, Tesla is already worth more than Ford and General Motors. Amazon, meanwhile, is now one of the most valuable companies in the world, and Amazon Web Services, the cloud computing division, now makes up the bulk of its profits, and its revenue grew 43% in its most recent quarter.

Clearly, those are good companies to hitch your wagon to. If Henderson is right about Fabrinet's revenue growth rate hitting 20% next year, the stock should continue to move higher.

10 stocks we like better than Fabrinet
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Fabrinet wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 5, 2017

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Tesla. The Motley Fool has a disclosure policy.