Why Analysts Are Chasing Finisar Targets Up So Much

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Finisar Corp. (NASDAQ: FNSR) reported its fiscal first-quarter financial results on Thursday after the markets closed. The stock saw a handy gain in Friday’s session, closing out the week up just shy of 20%. Finisar kicked off its fiscal year with a solid beat in the first quarter, and it is looking to continue to beat in the second. With this very positive earnings report, the company not only attracted investors, but analysts were clamoring to make calls on the stock as well.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying after the fact.

The company posted $0.38 in earnings per share (EPS) on $341.33 million in revenue. This compares to the consensus estimates from Thomson Reuters of $0.30 in EPS on revenue of $332.75 million. In the same period of the previous year, Finisar posted EPS of $0.23 and $314.0 million in revenue.

In terms of the outlook for the second quarter, Finisar is calling for EPS in the range of $0.44 to $0.50 and revenues between $355 million and $375 million. The consensus estimates are $0.32 in EPS on $342.91 million in revenue for the quarter.

Jerry Rawls, CEO of Finisar, commented:

I am pleased to announce that Finisar achieved record revenues for our first quarter of $341.3 million, an increase of $22.5 million, or 7.1% compared to the prior quarter. This growth was primarily driven by strong demand for 100Gb/s transceivers in CFP, CFP2, CFP4, and QSFP28 form factors. In addition, demand for wavelength selective switches was strong. Our gross margins improved significantly due to favorable product mix and leverage of our vertically integrated manufacturing infrastructure over the larger volume. The combination of revenues being at the higher end of our guidance range and better than expected gross margins resulted in earnings per fully diluted share exceeding the upper end of our guidance range.

After the earnings report, a few analysts weighed in on the stock:

  • B. Riley has a Buy rating and raised its price target to $32.25.
  • Barclays has an Equal Weight rating and raised its price target to $27 from $20.
  • Craig-Hallum has a Buy rating and raised its price target to $34 from $24
  • Goldman Sachs has a Neutral rating and raised the price target from $21 to $24.
  • Jefferies has a Hold rating and raised the price target to $28 from $19.
  • MKM Partners upgraded it to a Buy rating and raised its price target to $35 from $21.
  • Needham has a Buy rating and raised its price target to $32 from $28.
  • Piper Jaffray has an Overweight rating and raised its price target to $31 from $24.
  • Raymond James has an Outperform rating and raised its price target to $29 from $24.
  • Stifel has a Buy rating and raised its price target to $33 from $28.
  • William Blair Upgraded to an Outperform rating.

Shares of Finisar were trading up almost 13% at $26.20 on Friday’s close, with a consensus analyst price target of $22.68 and a 52-week trading range of $10.66 to $27.50.