Big Opportunity For Infinera Corp. In Metro Networks - Infinera (NASDAQ:INFN)

Networking equipment provider

Infinera Corp.INFN

is entering a new market for services in densely populated regions that may offer "major legs" to its growth story, an analyst said Monday.

The Sunnyvale, California-based company's shares have gained more than 50 percent year-to-date and changed hands recently at $22.27, up $0.76.

MKM's Michael Genovese expects the company's entry into the metro aggregation market, both via a new high-end platform to launch later this year and through its $350 million acquisition of Stockholm-based Transmode, expected to close also later this year.

Sector Close-Up

Gennovese maintained a $26 target and Buy rating on Infinera.

Genovese expects the market for providing connection networks in areas characterized by a high concentration of customers will grow by 15 percent annually to $10 billion in five years.

Infinera will obtain a 15 percent market share in the segment, called metro aggregation services, according to Genovese, who expects a $1.5 billion annual revenue opportunity" for Infinera.

Looking Ahead

Genovese sees the segment adding $10 million to Infinera's second-quarter revenue, but with faster growth to follow.

Revenue for the quarter ended March 31 grew more than 30 percent to $186.9 million, while the company swung to a net profit of $0.09 a share, from a net loss of $0.04 a year earlier.

Analysts on average rate Infinera at Overweight with a price target of $24.50.

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