Jefferies Sees Finisar Continuing To Benefit From Industry Trends Near-Term

Jefferies raised the target price of Finisar Corporation FNSR by $9 to $28 as it sees the company continue to benefit from favorable industry trends following strong first quarter.

The company's first quarter EPS of $0.38 topped the Street view by $0.08 and revenue grew 9 percent to $341 million, also beating consensus estimate of $334 million. Gross margin reached 33.1 percent versus the Street's 30.9 percent.

For the second quarter, the company's EPS guidance calls for about $0.47, well above consensus of $0.32, while revenue guidance of about $365 million also surpassed consensus view of $344 million. The company guided gross margin of 34 percent versus Street's 30.2 percent.

Despite strong results and upbeat outlook, the brokerage remains on the sidelines citing tough competition in the Datacom segment, mainly at 100G.

"We believe Finisar is likely to continue to benefit from strong trends in both Datacom and Optical components over the next couple quarters, but we'd need greater confidence that the good times will be more enduring before getting more constructive," analyst James Kisner wrote in a note.

At time of writing, shares of Finisar climbed 13.73 percent to $26.42 after touching a 52-week high of $27.50.