Fabrinet: I Expected This Selloff (Rating Upgrade)

Fabrinet is selling off today at a double-digit rate. The last time I covered FN, it was a Strong Sell for me. Since then, its stock price dropped by almost 29%. Valuation has reset meaningfully, with FN's forward P/E dropping from 50x to roughly ~29.0x. I believe the selloff is what FN stock needed. I'm happy about their Data Center performance and see it as a more valid buying option right now. I remain cautious about FN stock due to gross margin pressure and limited profitability upside, awaiting stronger fundamentals or a lower entry point before considering a buy.

I've only covered Fabrinet (FN) once since I started writing for Seeking Alpha. I rated it a Strong Sell last May. I argued its valuation was way too high.