William Blair: Reports Of Apple-Related Problems At Finisar 'Profoundly Inaccurate'

After falling 30 percent since its March 8 third-quarter report, Finisar Corporation FNSR represents an opportunity for investors, according to William Blair.

The Analyst

William Blair's Dmitry Netis maintains an Outperform rating on Finisar's stock with no assigned price target.

The Thesis

Finisar's stock has underperformed the broader market "significantly" amid multiple concerning headlines in recent months, Netis said in a Thursday note. But this may be unjustified, as one of the more notable headlines impacting the stock is inaccurate, the analyst said. 

BlueFin Research said in a research report that Finisar is encountering "major difficulties" in finding a 6-inch equipment set to supply Apple Inc. AAPL, which "opened a window" for II-VI, Inc. IIVI.

This line of thinking is "profoundly inaccurate," Netis said, as II-VI is likely ramping a low-powered VCSEL that Finisar doesn't manufacturer in the first place.

"Finisar, at Apple's request, has been focused on high-powered VCSELs out of its 4-inch Allen, Texas fab, which, while having limited capacity, continues to ramp up at an accelerated pace and is seeing improved yields," the analyst said. 

Finisar has already said the number of VCSELs it will ship this fall will be "meaningfully higher" than one year ago, Netis said. 

Apple CEO Tim Cook's upcoming TV interview "Revolution: Apple Changing The World" on April 6 should "underscore Apple's intention" to build Face ID modules in Texas, according to William Blair. 

Price Action

Shares of Finisar were up 6.26 percent at $15.62 at the close Thursday. 

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Photo courtesy of Apple.