Goldman Sachs Upgrades Finisar (FNSR) to Buy
- Wall St. edges higher as earnings kick into high gear
- Alibaba (BABA) Tops Q3 EPS by 17c, Revenues Rise 54%
- DuPont (DD) Tops Q4 EPS by 9c; Sees Merger Closing in First Half
- Johnson & Johnson (JNJ) Tops Q4 EPS by 2c; Guides Modestly Below the Street
- Pre-Open Stock Movers 01/24: (MPSX) (IIVI) (AKS) Higher; (FSM) (OCUL) (VZ) Lower (more...)
Find out which companies are about to raise their dividend well before the news hits the Street with StreetInsider.com's Dividend Insider Elite. Sign-up for a FREE trial here.
(Updated - October 11, 2016 9:08 AM EDT)
Goldman Sachs upgraded Finisar (NASDAQ: FNSR) from Neutral to Buy with a price target of $39.00 (from $24.00), implying upside of 27%. Analyst Doug Clark thinks the company will capitalize on telecom product cycles and drive revenue.
"We expect Finisar to capitalize on two incremental product cycles in the Telecom market (in addition to continued Datacom growth). Market share expansion through ROADMs and CFP2-ACO should drive further acceleration in the Telecom segment (~30% of sales) as well as for the overall company in CY17. While Finisar lags peers in 100G exposure (at ~30% of Datacom vs. peers ~60%), mix has improved meaningfully in the past 2 quarters and now 100G eclipses 40G exposure (20% of Datacom)," said Clark.
The analyst added, "Given its vertical integration, we estimate Finisar offers the most potential margin expansion among traditional component companies, and model >300bps of gross margin expansion in CY16 and nearly 150bps of expansion in CY17. If Finisar’s CY17E gross margins were to reach prior 2013 peaks, it would imply another $0.13 of EPS upside vs. our above consensus forecasts."
Discussing valuation, the analyst said, "FNSR trades at a discount to peers on both EV/S and P/E and only modestly above its median 5-year P/E multiple. We believe it should trade closer to peers given product cycle exposure, comparable EPS growth, and margin upside."
Shares of Finisar closed at $30.64 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Zions Bancorp (ZION) PT Lowered to $49 at FIG Partners Following 4Q EPS Beat
- Seaport Global Securities Upgrades Sanchez Energy (SN) to Buy
- Cowen Upgrades Mosaic (MOS) to Market Perform
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Upgrades
Related EntitiesGoldman Sachs
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!