J.P. Morgan Just Trimmed Price Target for Jabil Inc. (NYSE:JBL)

We recently compiled a list of the Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks. In this article, we will examine how Jabil Inc. (NYSE:JBL) compares to other stocks whose price targets have been recently reduced by analysts.

On Tuesday, US stock futures remained stable, reflecting investor optimism following a significant rally in the technology sector on Wall Street, which drove the broader market to a new all-time high. This latest surge marks the 30th record peak for the major US benchmark index this year, defying concerns about market breadth and the possibility of prolonged high US interest rates. Across the Atlantic, European equities experienced a robust rebound, reversing previous losses. Market analysts from M&G are suggesting that the current risks in France could present a strategic buying opportunity for investors, particularly those looking to capitalize on temporary market dips.

In the commodities market, Treasury yields held steady, indicating a cautious stance among investors amidst the mixed economic signals. Meanwhile, crude oil prices experienced a slight decline, whereas copper prices saw a significant increase, reflecting varying demand dynamics across different sectors. Goldman Sachs economists have pointed out that the US labor market might be approaching a critical juncture. Jan Hatzius from Goldman emphasized that any further decrease in labor demand could lead to a reduction in job numbers, not just a decline in job openings. This concern is underscored by recent data showing healthy nonfarm payrolls but rising initial and continuing jobless claims. Philadelphia Fed President Patrick Harker echoed this sentiment, suggesting that the Federal Reserve might consider either two interest rate cuts or none this year, depending on future economic data.

Adding to the financial landscape, a highly reliable technical trading strategy has issued a sell signal for long-term Treasury securities. This strategy, which has maintained a perfect trading record this year, was triggered after BlackRock's bond exchange-traded fund tracking long-term Treasuries surged last Friday. The fund's performance breached what is known as the “trading envelope,” indicating overbought conditions. As a result, the strategy suggests that traders should sell these securities when they are overbought and buy them when they are oversold.

The European Union, despite not matching the economic scale of its counterparts in the U.S. and China, aims to strategically challenge them, according to Margrethe Vestager, the bloc's competition chief. Vestager emphasized in an interview with CNBC on Tuesday that the EU has significantly improved its ability to defend against unfair trade practices. She highlighted recent moves, including the imposition of higher tariffs on Chinese electric vehicle imports due to findings of substantial unfair subsidies benefiting Chinese manufacturers, potentially undercutting European producers. Vestager stressed that the EU's approach isn't about outspending its rivals but rather strategically allocating resources. She acknowledged that while the EU cannot match the financial clout of China or the U.S., it can invest strategically in areas of common European interest, such as hydrogen, electric batteries, microelectronics, cloud computing, and healthcare. She pointed to a 100 billion euro fund dedicated to advancing these cutting-edge technologies, aiming to leverage public funds to attract private capital where market forces alone might fall short. Amid escalating trade tensions globally, particularly between the U.S. and China, Vestager reiterated the EU's careful stance, seeking to maintain balanced relations with both economic giants while safeguarding its own interests and alliances. She emphasized that the EU's investments in technology and sustainability are not mere imitations of its competitors' strategies but rather tailored to Europe's unique needs and strengths in the global marketplace. Vestager concluded by urging a focus on the EU's agenda rather than comparisons with other regions, asserting that the EU's approach aims to be effective and sustainable in achieving its economic and technological goals.

China's recent property support measures have successfully stimulated sales in its major cities, but smaller regions continue to face significant challenges, indicating a prolonged downturn for much of the national real estate market. According to Reuters, on May 17, China lowered mortgage rates and downpayment requirements and directed local governments to purchase unsold apartments to convert them into social housing. This initiative has led to numerous cities easing their housing policies.

Data from real estate research firms and interviews with agents reveal that these measures have had a mixed impact. While they have revived demand in cities like Beijing and Shanghai, smaller cities have seen limited improvement. Reports of home price declines further underscore concerns that the property sector's troubles may persist, especially in smaller cities burdened with a higher supply of unsold properties. This excess inventory is keeping buyer sentiment low, prompting calls for additional support from policymakers. Data from the China Index Academy show that the average daily transactions of second-hand homes in Shanghai between May 18 and June 5 were 27.7% higher than in April, and in Beijing, they increased by 8.1%. Meanwhile, new home transactions in these cities declined slightly. Agents reported a surge in inquiries and home viewings, particularly in Shanghai, where one agent noted a tripling of inquiries following a downpayment reduction. Despite these signs of activity in major cities, smaller cities continue to struggle. Jiaozhou, a city with under a million residents, has attempted to stimulate demand by allowing buyers to split downpayments into two installments, but this has had little impact. In Changsha, authorities have urged developers to offer full refunds on deposits if buyers cancel their purchases, hoping to boost buyer confidence. However, local agents report that demand remains weak, with many customers skeptical about the effectiveness of the new policies. Goldman analysts predict that additional easing measures are likely in the coming months, but they caution that these measures might only lead to a slow, L-shaped recovery in the sector over the coming years.

In our original article we listed 10 companies whose price targets were cut by analysts and ranked them by the change in their market prices. Negative changes signal that the market participants agree with the analysts’ assessment.

10. Jabil Inc. (NYSE:JBL)

Price Reaction after the Price Target Cut: +5.00(+4.18%) 

J.P. Morgan adjusted Jabil Inc. (NYSE:JBL) price target from $155 to $145 while reiterating an "overweight" rating on June 17. This adjustment came alongside a positive market response, with Jabil Inc. (NYSE:JBL) stock price increasing by 4.18% following the announcement. Jabil Inc. (NYSE:JBL) is known for its extensive expertise in manufacturing, including electronics manufacturing services and solutions for various industries, such as healthcare, aerospace, automotive, and consumer electronics. The company is recognized for its innovation and supply chain management capabilities. Jabil Inc. (NYSE: JBL) recently underwent significant leadership changes following an internal investigation into corporate policies. The company has appointed Michael Dastoor as its new Chief Executive Officer, succeeding Kenneth Wilson, who has departed from both the CEO position and Jabil's Board of Directors. Concurrently, Gregory Hebard has been named Chief Financial Officer, leveraging his extensive financial leadership experience since joining Jabil in 2009. Mark Mondello, Executive Chairman of Jabil Inc. (NYSE:JBL) Board, expressed confidence in Dastoor's capabilities and deep understanding of the company's operations and culture. Dastoor, who has been with Jabil for more than twenty years and previously served as CFO since 2018, affirmed his commitment to driving growth and delivering value to Jabil's stakeholders. The company clarified that the leadership changes and internal investigation do not impact its financial reporting integrity.  Looking forward, Jabil Inc. (NYSE:JBL) anticipates releasing its third-quarter fiscal year 2024 financial results on June 20 before the market opens. This announcement is expected to provide further insights into the company's performance amid its leadership transition and ongoing strategic initiatives.

Artisan Mid Cap Fund stated the following regarding Jabil Inc. (NYSE:JBL) in its fourth quarter 2023 investor letter:

“Along with DexCom, notable adds in the quarter included Quanta Services and Jabil Inc. (NYSE:JBL). Jabil provides outsourced manufacturing services to a diverse set of end markets and customers. For two decades, Jabil focused on manufacturing to customer-specified blueprints, which inherently carried low margins (2%–3%), a problem further exacerbated by Asian competition. However, in 2017, Jabil commenced a strategic pivot to focus on manufacturing high-growth, low-volume and high-value products in areas such as health care, industrial, automotive, cloud and 5G infrastructure. We believe moving away from more cyclical consumer electronics markets toward secular growth areas, such as EVs and medical devices, will lead to both faster growth and higher margins. Like other electronic components providers, Jabil saw slowing demand late in the year and lowered its fiscal 2024 outlook as a result. However, consistent with our thesis that Jabil has shifted its business mix toward more profitable, higher growth end markets, the company’s earnings and cash flow outlook remains relatively strong despite the cyclical pressures. Furthermore, the company sold its smartphone manufacturing business late in the quarter, which removes a low-growth, low-margin legacy exposure, further shifting its business mix in the right direction. We used the stock’s underperformance to increase our GardenSM position ahead of what we expect to be a compelling profit cycle once the current macro headwinds abate.”

Overall JBL ranks 10th on our list of the 10 stocks whose price targets were recently trimmed by analysts. You can visit Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks to see the other stocks whose price targets have been recently reduced by analysts. While we acknowledge the potential of JBL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JBL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

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Disclosure: None. This article is originally published at Insider Monkey.