Oclaro (OCLR) PT Lowered to $8 at MKM Partners After Meeting with Management

MKM Partners lowered its price target on Oclaro (NASDAQ: OCLR) to $8.00 (from $9.00) while maintaining a Buy rating after meeting with management. Overall end market demand trends are solid, and Oclaro has very good technology and management. The company also continues to enjoy very high share and above corporate average GMs in the CFP2-ACO market. It has long term supply agreements covering pricing and minimum purchase commitments with four major OEM customers that make up the large majority of the CFP2-ACO market.

Management expects CY18 coherent port growth in China to be 10%-20%, which is solid but not spectacular. Analyst Michael Genovese thinks the company is starting to see a lot of success selling its integrated coherent receiver and transmitter (ICR/ICT) parts, which Genovese believes has four-digit ASPs, to major Chinese OEMS that are assembling their own -DCO modules.

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