Fabrinet (NYSE:FN) just secured a major deal with Amazon (NASDAQ:AMZN), sending its stock soaring over 10% at 9.59am today. The agreement gives Amazon a warrant to buy up to 381,922 shares at $208.48 each, with 38,192 shares vesting immediately and the rest tied to future payments. More than just a transaction, this signals a deeper connection between the e-commerce giant and Fabrinet, a key player in high-precision optical and electro-mechanical manufacturing. The deal does come with a catcha $4.2 million non-cash accounting adjustment, shaving about $0.12 off Fabrinet’s per-share earnings for the upcoming quarter.
Despite the accounting hit, Fabrinet remains in a rock-solid financial position. The company holds more cash than debt and boasts a strong current ratio of 3.32, underscoring its financial resilience. Off the back of the deal, Fabrinet revised its Q3 guidance, now expecting GAAP EPS between $2.20 and $2.28, while non-GAAP lands between $2.43 and $2.51. With a P/E ratio of nearly 22.5 and 15% revenue growth over the past year, the stock may still be trading below its fair value. The deal also gives Amazon registration rights and early notification of certain acquisitions, hinting at bigger plays ahead.
This agreement could mark the beginning of a long-term partnership, as Amazon strengthens its supply chain relationships and Fabrinet gains deeper ties to one of the world’s most dominant tech giants. Investors will be watching closely as both companies navigate the evolving landscape of advanced manufacturing and supply chain integration.
This article first appeared on GuruFocus.
