Pro Analysis

Goldman: Sell Jabil Circuit on poor iPhone sales

A customer compares rose gold iPhone SE (L) and iPhone 6S at an Apple Store
VCG/VCG | Getty Images
A customer compares rose gold iPhone SE (L) and iPhone 6S at an Apple Store

Investors should avoid Jabil Circuit due to weak iPhone and other customer sales, according to Goldman Sachs, which downgraded shares of the technology manufacturer to sell from neutral.

"We see earnings pressure from both limited top-line growth and increased overhead costs for Jabil. For revenue, Street assumptions have been reduced for 7 of Jabil's top 10 customers since the last EPS report," Goldman Sachs' Mark Delaney wrote in a note to clients Tuesday.

"Our reduced estimates are consistent with the fact that Goldman Sachs analysts have lowered estimates for several of Jabil's key customers since Jabil's last report (e.g. Apple, NetApp and Ericsson). ... High Apple exposure is a key part of the reason that Jabil has had to significantly reduce its guidance in two of the last three fiscal years."