Electronic manufacturer Jabil (JBL) gained about 5% on Friday after granting a warrant to Amazon.com NV Investment Holdings LLC, a subsidiary of Amazon (AMZN). The warrant allows Amazon to acquire up to 1.16 million shares of Jabil’s common stock at a price of $137.7671 per share, calculated from the average closing price of Jabil stock over the past 30 trading days.
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The warrant will expire on December 27, 2031. Under the agreement, some shares vest immediately, while the rest will vest depending on AMZN’s purchases of Jabil’s products and services during the warrant period.
By issuing this warrant, Jabil aims to encourage Amazon to boost its purchases of electronic components and manufacturing services. This strategy could help Jabil secure a stable revenue stream over the long term. Additionally, its partnership with Amazon may enhance Jabil’s brand reputation and strengthen its position in the market.
Warrant Follows Jabil’s Upbeat Fiscal Q1 Results
It is worth noting that the agreement comes shortly after Jabil’s better-than-expected fiscal first-quarter results, reported on December 18. The company witnessed revenue and cash flow growth, particularly in the Intelligent Infrastructure segment, due to strong demand for AI-related cloud and data center products.
Importantly, following the release of earnings, all six Wall Street analysts covering the stock raised their price targets. Among the bullish analysts, Ruplu Bhattacharya from Bank of America Securities reiterated a Buy rating on Jabil and increased the price target to $165 (implying 10.3% upside) from $150. The analyst is optimistic about Jabil’s future performance, citing its AI opportunities, robust cash flow, and effective capital return strategies.
What Is the Prediction for JBL?
Turning to Wall Street, JBL has a Strong Buy consensus rating based on five Buys and one Hold assigned in the last three months. At $162.67, the average Jabil price target implies an 8.69% upside potential. Shares of the company have gained 36.22 over the past six months.
Is AMZN a Good Stock to Buy?
Overall, AMZN stock has a Strong Buy consensus rating based on 46 Buys and one Hold assigned in the last three months. At $248.84, the average Amazon price target implies an 11% upside potential. Shares of the company have gained 12.5% in the past six months.
