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FNSR

Finisar

$30.64

-0.02 (-0.07%)

, ACIA

Acacia Communications

$92.50

-7.5 (-7.50%)

13:37
10/11/16
10/11
13:37
10/11/16
13:37

As China lifts optical networking demand, Goldman calls out Finisar as winner

Finisar (FNSR), Acacia (ACIA) and other best-in-breed optical networking companies look set to outperform amid sharply increased Chinese demand, though the sector's triple-digit rally has also created valuation risks for Lumentum (LITE), Wall Street analysts argued Tuesday. NEEDHAM BULLISH ON ACACIA: Needham analyst Alex Henderson reiterated a Buy rating on Acacia Communications while raising his price target on the shares to $125 from $100. The analyst highlights the "substantial" positive headlines in the networking market, including supply requests from state-owned China Mobile (CHL) that suggest 2017 component orders 30%-60% above this year's levels, and he argues that Acacia looks both supply- and capacity-constrained as demand growth outstrips production into next summer or longer. The company's recent third quarter preannouncement beat Wall Street estimates, and Henderson believes Acacia is "likely" to guide for another outperformance in the December quarter, potentially 5%-15% above current forecasts. GOLDMAN SAYS BUY FINISAR, SELL LUMENTUM: As part of larger note on the optical networking component space, Goldman Sachs analyst Doug Clark upgraded Finisar to Buy, downgraded Lumentum to Sell and remained Neutral on Acacia and Infinera (INFN), arguing that stock selection is key given the sector's run-up in 2016. The analyst notes that Chinese demand is continuing and optical components are also making inroads in metropolitan telecom and datacenter upgrade cycles, leaving the "well positioned," relatively cheap, and vertically integrated Finisar ready to deliver industry-leading gross margin expansion. On the other hand, Clark says Lumentum's "premium" valuation already reflects potential upside from industry tailwinds, while its delayed, and potentially substitutive rather than additive, product launches raise competitive concerns. Meanwhile, a highly-concentrated client base keeps Clark on the sidelines for Acacia despite its disruptive potential and high growth. PRICE ACTION: Shares of Acacia are down 1.3% to $91.27 in afternoon trading, while Finisar and Lumentum are down 2.5% and 9%, respectively.

FNSR

Finisar

$30.64

-0.02 (-0.07%)

ACIA

Acacia Communications

$92.50

-7.5 (-7.50%)

LITE

Lumentum

$44.50

0.26 (0.59%)

INFN

Infinera

$9.44

0.02 (0.21%)

CHL

China Mobile

$60.96

-2.16 (-3.42%)

  • 26

    Oct

  • 14

    Nov

FNSR Finisar
$30.64

-0.02 (-0.07%)

10/05/16
PIPR
10/05/16
NO CHANGE
Target $27
PIPR
Overweight
Piper recommends exposure to optical component names
Piper Jaffray analyst Troy Jensen raised his estimates for all companies in his optical component coverage saying strength in optical demand will continue. Consensus estimates don't reflect the magnitude and sustainability of 100G cycle, Jensen tells investors in a research note. He recommends investors get exposure to the group. The analyst raised his price target for Applied Optoelectronics (AAOI) to $27 from $24, for Fabrinet (FN) to $53 from $50, for Finisar (FNSR) to $38 from $31, for Lumentum (LITE) to $47 from $38, for NeoPhotonics (NPTN) to $20 from $17 and for Oclaro (OCLR) to $10.50 from $9. Jensen has Overweight ratings on all six names.
09/09/16
09/09/16
UPGRADE

On The Fly: Top five analyst upgrades
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1. Chesapeake (CHK) upgraded to Buy from Hold at Wunderlich with analyst Jason Wangler saying the company's assets are performing and its balance sheet is improving. 2. GameStop (GME) upgraded to Buy from Neutral at Hilliard Lyons. 3. Finisar (FNSR) upgraded to Buy from Neutral at MKM Partners with analyst Michael Genovese saying he is "extremely upbeat on the Optical components/module industry," and Chinese demand for 10G and 100G Optical modules appears it can stay strong for multiple years. 4. Randgold (GOLD) upgraded to Buy from Neutral at UBS with the firm citing the recent pullback in the shares and the potential for a dividend raise in 2017. 5. Teekay LNG (TGP) upgraded to Outperform from Market Perform at Wells Fargo analyst Michael Webber saying the discount to net asset value and the company's progress around financing its order book make the valuation "particularly compelling." This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
10/11/16
GSCO
10/11/16
UPGRADE
Target $39
GSCO
Buy
Finisar upgraded to Buy from Neutral at Goldman
Goldman Sachs analyst Doug Clark upgraded Finisar to Buy saying the company's key product cycles in the Telecom market should drive further revenue growth acceleration. Clark sees the potential for "substantial potential margin upside" and upped his price target for the shares to $39 from $24.
10/11/16
GSCO
10/11/16
DOWNGRADE
Target $36
GSCO
Sell
Lumentum downgraded to Sell from Neutral at Goldman
Goldman Sachs analyst Doug Clark downgraded Lumentum (LITE) to Sell saying product substitution and competition are risks to the company's "premium" valuation. Lumentum is slightly behind competitors in terms of timing of new product ramp, Clark tells investors in a research note. His $36 price target represents 19% downside. The analyst this morning also upgraded Finisar (FNSR) to Buy and kept Neutral ratings on Acacia Communications (ACIA) and Infinera (INFN) in a research note on the Optical Components space.
ACIA Acacia Communications
$92.50

-7.5 (-7.50%)

09/09/16
DBAB
09/09/16
NO CHANGE
Target $125
DBAB
Buy
Acacia Communications price target raised to $125 from $90 at Deutsche Bank
Deutsche Bank analyst Vijay Bhagavath raised his price target for Acacia Communications to $125 from $90 after joining the company's CEO and CFO in a non-deal roadshow. The analyst sees "little risk" to Q3 estimates given solid near-term order visibility in Datacenter Optical and China Metro build outs. The consensus view of Acacia's total addressable market at $4B is conservative and does not factor in up-sell into a $1B-$2B 100G Switching and Routing market, Bhagavath tells investors in a research note. He reiterates a Buy rating on the shares. Acacia closed yesterday down $2.31 to $117.89.
09/06/16
NEED
09/06/16
NO CHANGE
Target $20
NEED
Strong Buy
Needham remains a buyer of NeoPhotonics ahead of analyst day
Needham analyst Alex Henderson believes NeoPhotonics (NPTN) is "exceptionally well positioned" for strong results over the next 3-4 quarters. The analyst "aggressively recommends" investors Buy NeoPhotonics' shares before the company's analyst day on September 8. Further, Henderson thinks Acacia's (ACIA) over $4B market cap will likely drive them to be acquisitive, and notes that it may seek to reduce costs as a percent of revenues by a potential acquisition of, for example, NeoPhotonics or Oclaro (OCLR). He reiterates a Strong Buy rating and $20 price target on NeoPhotonics' shares.
10/11/16
NEED
10/11/16
NO CHANGE
Target $125
NEED
Buy
Acacia Communications price target raised to $125 from $100 at Needham
Needham analyst Alex Henderson raised his price target for Acacia Communications to $125 from $100, given the indications of new orders from China Mobile likely coming in February of 2017 and the upside guidance of the Q3 actuals. The analyst also notes that there has been a substantial amount of positive news flow on the Optical market and he believes the company stands to benefit from much of it. Henderson reiterates a Buy rating on the shares.
LITE Lumentum
$44.50

0.26 (0.59%)

08/16/16
NEED
08/16/16
NO CHANGE
Target $54
NEED
Buy
Fabrinet price target raised to $54 from $48 at Needham
Needham analyst Alex Henderson raised his price target for Fabrinet (FN) to $54 from $48 following the company's better than expected quarterly results and "sharp raise" to guidance. The analyst expects further beat and raise quarters with visibility well out into the first half of 2017. Moreover, Henderson believes the news flow reads through to NeoPhotonics (NPTN), Oclaro (OCLR), and Lumentum (LITE). He reiterates a Buy rating on Fabrinet's shares.
08/18/16
NEED
08/18/16
NO CHANGE
NEED
Nokia, Alcatel-Lucent win positive for optical component companies, says Needham
Needham analyst Alex Henderson says that Alcatel-Lucent (ALU)/Nokia (NOK) announcement of a major contract win to build over 30% share of China Mobile's (CHL) 2016-2017 new construction of optical network is also a major positive for optical component companies such as Oclaro (OCLR), NeoPhotonics (NPTN), Fabrinet (FN), Lumentum (LITE), Inphi (IPHI), and Acacia (ACIA). Henderson thinks this is likely the first of three major awards in China, which will likely result in the current sold-out conditions in the coherent optical market to stretch out well into 2017.
INFN Infinera
$9.44

0.02 (0.21%)

09/30/16
STFL
09/30/16
INITIATION
STFL
Hold
Infinera coverage resumed with a Hold at Stifel
Analyst PAtrick Newton resumed coverage of Infinera with a Hold rating and $9 price target. He says that the company's fate is tied to its 4th generation photonic integrated circuit (PIC) + FlexCoherent processor, dubbed the Infinite Capacity Engine, which will ramp throughout 2017. Consequently, he believes that the company faces elevated execution risk.
08/25/16
SBSH
08/25/16
NO CHANGE
Target $23
SBSH
Neutral
Ciena Q3 results should be relatively in-line, says Citi
Citi analyst Stanley Kovler raised his price target on Ciena (CIEN) to $23 from $21, saying that he expects a relatively in-line Q3 report from the company. He also removed the firm's High Risk rating on Ciena due to lower share volatility, but keeps a Neutral rating on the shares, saying that Infinera's (INFN) aggressive pricing in Ciena's metro markets outside of Tier 1, along with existing pricing pressure from other players, is a major risk going forward.
08/25/16
08/25/16
DOWNGRADE

On The Fly: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Northrop Grumman (NOC) downgraded to Neutral from Overweight at JPMorgan with analyst Seth Seifman saying he recommends taking profits on shares and said cash flow estimates are below consensus due to capex projections. 2. Sprint (S) downgraded to Underperform from Neutral at Buckingham with analyst James Ratcliffe saying shares are more than pricing in continued improvement in subscriber and ARPU performance, along with capex at or below industry norms at current levels. 3. DHT Holdings (DHT) downgraded to Equal Weight from Overweight at Morgan Stanley with analyst Fotis Giannakoulis saying he expects crude tanker demand to lag fleet supply in 2017-2018 and sees potential pressure on the dividend. 4. Workday (WDAY) downgraded to Equal-Weight from Overweight at First Analysis with analyst Corey Greendale saying the company's second quarter results beat expectations but lowered its rating due to valuation. 5. Infinera (INFN) downgraded to Sell from Neutral at Citi with analyst Stanley Kovler saying he expects additional margin pressure from Research and Development spending and its "aggressive" pursuit of Metro deals translating into "yet another leg down" in the company's earnings. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
CHL China Mobile
$60.96

-2.16 (-3.42%)

09/22/16
GSCO
09/22/16
DOWNGRADE
GSCO
Neutral
China Mobile downgraded to Neutral from Buy at Goldman
08/10/16
GSCO
08/10/16
DOWNGRADE
GSCO
Buy
China Mobile downgraded to Buy from Conviction Buy at Goldman
07/18/16
07/18/16
INITIATION

On The Fly: Top five analyst initiations
Catch up on today's top five analyst initiations with this list compiled by The Fly: 1. Twilio (TWLO) initiated with a Neutral at Goldman, an Outperform at William Blair, a Hold at Canaccord, a Sector Weight at Pacific Crest, a Market Perform at JMP Securities, and with a Neutral at JPMorgan. 2. Selecta Biosciences (SELB) initiated with a Buy at UBS, a Buy at Stifel, a Buy at Canaccord, and a Buy at Needham. 3. China Mobile (CHL) and China Telecom (CHA) assumed with a Buy at Jefferies. 4. NetEase (NTES) initiated with a Buy at Brean Capital. 5. Sysco (SYY) reinstated with a Hold at Deutsche Bank. This list is just a portion of The Fly's analyst coverage. To see The Fly's full Street Research coverage, click here.

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