Jabil Poised For Further Upside As AI Revenue Surges And Other Markets Recover: Analyst

BofA Securities maintained a Buy rating on Jabil (JBL), raising the price target to $245 from $225, citing strong fiscal third-quarter results and significant AI revenue potential, which could reach $13.3 billion by fiscal year 2027. The analyst believes Jabil's fiscal 2026 and 2027 revenue estimates are conservative, driven by AI, Amazon strength, and growth in healthcare and digital commerce, with potential for higher EPS due to conservative Street modeling. Jabil's valuation trades at a discount to peer Celestica, despite similar EPS growth potential.

Analysis

Bank of America Securities has reiterated a 'Buy' rating for Jabil (JBL) and increased its price target to $245 from $225, signaling strong conviction in the stock's continued upside despite its 42% year-to-date gain. The core of the bullish thesis rests on the analyst's view that revenue and EPS estimates for fiscal years 2026 and 2027 are conservative. The analyst models Jabil's AI-related revenue to grow 25% year-over-year in FY26 and FY27 to reach $13.3 billion, a significant deceleration from the 50%+ growth seen in FY25, which leaves room for potential outperformance. Furthermore, the forecast assumes a net decline in Jabil's other business lines in FY26, creating another avenue for an upside surprise should those markets recover. Growth is expected to be driven by strong demand from Amazon, new opportunities in AI-related switching and optical transceivers, and program ramps in healthcare and digital commerce. From a valuation perspective, Jabil trades at 18 times the analyst's calendar 2026 EPS estimate, a notable discount to its peer Celestica at 22 times, which is attributed to Jabil's lower operating margin.

Key Decisions for Investors

• Investors could consider the stock's current valuation, as the BofA analyst highlights that Jabil trades at a discount to peer Celestica (18x vs. 22x forward EPS) despite similar growth potential, suggesting a relative value opportunity.
• It is prudent to monitor Jabil's future earnings for AI revenue growth rates exceeding the analyst's conservative 25% projection and for any signs of stabilization or recovery in its non-AI business segments, as these are the primary catalysts for potential earnings beats.
• Given that every $1 billion in incremental revenue could add $0.40 to EPS, investors should track new program ramps in healthcare and digital commerce, as well as demand from key customers like Amazon, as leading indicators of future estimate revisions.