Schwab SoundView cut its estimates on Jabil Circuit (JBL).
Analyst Michelle Gutierrez says third-quarter EPS and revenues were in line, but margins deteriorated due to program ramps and a $25 million sell-through of component inventory (zero margin). She notes EPS is in line on lower share count. She adds that EPS and margin guidance is disappointing, though the amount of new business ramps (which is pulling margins down) indicates positive growth trends.
Gutierrez cut the 30 cents fourth-quarter EPS estimate to 26 cents, and $1.50 fiscal 2005 (Aug.) to $1.28. Though her enthusiasm has tempered, she says she still thinks Jabil is well positioned for improved demand.
Gutierrez believes the announcement of a new CFO is unrelated to the company's operations. She keeps her outperform rating and has a $35 target price.