Needham & Company Reiterates Buy on Oclaro (OCLR) Despite ZTE 'Debacle'

Needham & Company reiterated a Buy rating and $5.00 price target on Oclaro (NASDAQ: OCLR) as shares dip following recent ZTE "debacle". Based on the Oclaro comment that the ZTE business was running at over 10% of demand, Needham thinks in order to stay within the guidance band strongly implies Oclaro was on track to "Beat and Raise" again before this unfortunate ZTE event. Oclaro stated in their press release that they will be at the low end of the previous guidance of $97-103 million.

Analyst Alex Henderson Commented, "Oclaro's stock price got whacked on the ZTE debacle. However, we see this as a one-quarter blip that will not impact CY2Q. The industry is sold out across broad swaths of product. While ZTE was a 10% plus customer in the outlook and less than 5% last year, we believe the demand environment is strong enough to allow Oclaro to simply switch the production lines to serve other customers. This should take 2-4 weeks to realign the production, but it should be completely accomplished by the end of March. Looking at our estimates, our forecast remains unchanged. We are comfortable with our full-year estimate and we strongly reiterate our Buy rating."

For an analyst ratings summary and ratings history on Oclaro click here. For more ratings news on Oclaro click here.

Shares of Oclaro closed at $4.00 yesterday.

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