Viavi Solutions (VIAV): Tough Choices Ahead, Looking Like a Transition Year - Needham
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Needham & Company analyst Alex Henderson, reiterated his Hold rating on shares of Viavi Solutions (NASDAQ: VIAV) after Viavi reported a solid quarter and offered an in-line guide for the September FY1Q17 quarter.
Viavi is planning an analyst day in mid-September and the analyst is expecting the relatively new management team to lay out its plans for the troubled Service Enablement unit. Remediating the steep losses in the SE Growth units is a big opportunity. The question is whether management will make the hard decisions and aggressively prune these businesses back. He estimates they are losing a significant $0.30+ per share.
The analyst thinks they will likely gradually address this issue in FY17 and FY18. As the high-margin OSP business eases back from a spike in FY16 and the SE high-margin legacy continues to decline at a 30% pace, the June FY17 fiscal year looks like a transition year.
Shares of Viavi Solutions closed at $7.30 yesterday.
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