MKM Partners Remains Bullish on Oclaro (OCLR) Ahead of 1Q Report
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MKM Partners reiterated a Buy rating and $10.00 price target on Oclaro (NASDAQ: OCLR) ahead of the company's 1Q earnings report. Recent checks with several of the leading Optical component makers suggest they continue to be "sold out" of all key 100+G products, and certain tunable 10G products, for the next 3-5 quarters.
Analyst Michael Genovese commented, "We are reiterating our Buy rating and Top Pick status for OCLR into 1QFY17 earnings likely to be reported in early November. We expect an upbeat report and outlook and, with the stock down 13% over the past month (vs. NASDAQ flat), the set up appears favorable. OCLR is up 204% over the past year (vs. NASDAQ up 6%), but we think investors have become concerned recently about: 1) whether any of the 100+G cycles, particularly China, will slow in CY17; 2) whether near-term expectations are too high; and 3) the potential dilutive effects of the 17.25mn share secondary in late September. Based on our field checks, we think 100+G Optical component/module demand will continue to sharply expand in both FY17 and CY17, including in China. We also think OCLR should blow past FY17 estimates even with the share dilution which is not yet modeled into most published estimates, including ours."
Shares of Oclaro closed at $7.84 yesterday.
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