A high-tech investment analyst in the San Francisco Bay area is giving a big thumb's up to Jabil Circuit's acquisition of Nypro, adding that Nypro has the potential for significant growth in its core plastics molding operations.
"We believe that since 2006 Nypro has seen a revenue CAGR in the high teens we believe that JBL could easily add 200-300bps (basis points) of additional growth to the Nypro asset by investing in capex and broadening their geographic footprint," says Amit Daryanani, a research analyst at RBC Capital. "We think this should provide JBL's healthcare and industrial segment the 15%+ growth that the Company has historically targeted."
A basis point is a unit equal to one hundredth of a percentage point.
He estimates that the operating margins in Nypro's targeted medical and packaging segments have been running at 6-7%, while noting that negative results in smartphones operations in China have recently dragged overall results down. Jabil's operating margins have been around 4% in recent quarters.