Jabil (NYSE:JBL), which provides manufacturing solutions across multiple countries, announced that it has agreed to divest its mobility business in China to the electronics unit of Chinese EV (Electric Vehicle) maker BYD (BYDDY). The deal, valued at $2.2 billion, will enable Jabil to focus on high-growth end markets, enhance its shareholders’ returns, and drive growth.
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For BYD Electronic, the deal will support the company’s smartphone components business and expand its customer and production base.
Jabil Focuses on Accelerating Growth
Jabil expects to use the proceeds from the sale to repurchase incremental shares. Additionally, the company will increase its investments in EVs, renewable energy, AI (Artificial Intelligence) cloud data centers, healthcare, and other end-markets.
Investors should note that a significant portion of Jabil’s manufacturing, design, support, and storage operations are being conducted in China. However, the geopolitical environment poses a challenge.
Nonetheless, Goldman Sachs analyst Mark Delaney believes that Jabil’s focus on driving investments and increasing exposure to growing end markets like EVs, renewables, cloud, and healthcare are positives. In a note to investors dated June 16, Delaney said these markets provide “better through cycle revenue growth, longer product cycles, and opportunities for higher margins.” Delaney is bullish about JBL stock.
Jabil stock has risen nearly 52% year-to-date, and its focus on high-growth markets is positive. Against this backdrop, let’s look at what the Street recommends for Jabil stock.
Is Jabil a Good Stock to Buy?
Wall Street analysts are bullish about Jabil’s prospects. Jabil stock has received six Buy and one Hold recommendations for a Strong Buy consensus rating. Further, analysts’ average price target of $116.14 implies 12.52% upside potential from current levels.
