Calix (CALX) PT Raised to $40 at Jefferies After a Blowout Quarter That Bodes Well for Two Comps

Jefferies analyst George Notter raised the price target on Calix (NYSE: CALX) to $40.00 (from $35.00) after the company reported Revenue and EPS of $170M / $0.45 compared with the Street Consensus of $159.6M & $0.33,. The top line was strong in light of component supply challenges that shifted some business into Q1. Also, CenturyLink came in below 10% of sales. Small customers (<250K access lines) drove the results. The segment accounted for $144m (+65% Y/Y). The PT increase is predicated on 3 beliefs:

1) Calix Cloud will drive significant long-term upside to Street revenue/ EPS expectations and that this transformation is still at an early stage

2) the current WFH environment emphasizes the criticality of good consumer broadband services – a big positive for Calix

3) other catalysts have yet to play out (RDOF, potential Broadband Stimulus

The analyst reiterated a Buy rating, stating "Clearly, demand for rural broadband remains very strong, which bodes well for Cambium Networks (NASDAQ: CMBM) and ADTRAN, Inc. (NASDAQ: ADTN), two other rural broadband plays that we like." He went on to state "We estimate that Calix Cloud is tracking in the low- to midteens (i.e. 13-15%) as a percentage of total sales. Moreover, it is growing (90% Y/Y customer growth). Q4 gross margin, cash flow, and deferred revenue growth all support our Calix Cloud thesis."

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