Tech Giant Jabil Adjusts Q2 FY24 Guidance Post Mobility Division Divestiture: Details
Portfolio Pulse from Lekha Gupta
Jabil Inc (NYSE:JBL) has revised its Q2 FY24 guidance following the divestiture of its Mobility business to BYD Electronic (International) Company Limited, a subsidiary of BYD Co Ltd (OTC:BYDDF), for $2.2 billion. The transaction closed earlier than the anticipated date of January 31, 2024, leading to a reduction in the midpoint of the prior guidance range for net revenue by about $400 million and core EPS by $0.30. The new Q2 revenue guidance is $6.6 billion to $7.2 billion, with adjusted EPS of $1.43 to $1.83, both below consensus estimates. FY24 revenue guidance was also slightly revised to $30.6 billion, with core EPS expected to be over $9.00. CFO Mike Dastoor expressed confidence in offsetting lower Q2 income and fully utilizing the $2.5 billion repurchase authorization in FY24. JBL shares dropped slightly by 0.381% to $127.50 in premarket trading.
December 29, 2023 | 2:20 pm
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NEGATIVE IMPACT
Jabil Inc has lowered its Q2 FY24 revenue and EPS guidance due to the early completion of its Mobility division sale to BYD Electronic. The company plans to mitigate the impact through accelerated share buybacks.
The downward revision in guidance is likely to negatively impact investor sentiment in the short term, as both revenue and EPS expectations have been lowered. However, the company's plan to utilize its share repurchase authorization may provide some offsetting support to the stock price.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
BYD Co Ltd's subsidiary, BYD Electronic, has completed the acquisition of Jabil's Mobility business for $2.2 billion, which may impact BYD's financials and strategic positioning.
The acquisition of Jabil's Mobility business could be seen as a positive development for BYD, potentially enhancing its product offerings and market position. However, the financial impact will depend on how well the integration proceeds and the performance of the acquired unit.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50