Market Overview

Viavi Solutions Holds 5G Opportunity, Says Bullish Rosenblatt

Viavi Solutions Holds 5G Opportunity, Says Bullish Rosenblatt

Viavi Solutions Inc (NASDAQ: VIAV) reported third-quarter revenue and EPS Thursday that were ahead of consensus estimates and guided to higher-than-expected fourth-quarter revenue.

The company’s 5G testing business could benefit midcycle and later on in the deployment, while the 3D sensing business will likely continue to grow in the second half of calendar 2019, according to Rosenblatt Securities.

The Analyst

Jun Zhang maintained a Buy rating on Viavi Solutions with a $15 price target. 

The Thesis

Viavi reported quarterly EPS of 13 cents, with flat gross margin of 61.3 percent. Network enablement revenue grew 42.7 percent year-on-year to $180.5 million and represented 68.1 percent of total sales, Zhang said in a Friday note. 

Viavi guided to fourth-quarter revenue of $278 million and EPS 15 cents, in-line with expectations.

Viavi’s 5G testing business performed well during the third quarter. The 5G cycle is still in the early stages, and the company’s 5G testing business could see more benefits in the mid and later cycles of 5G deployment, the analyst said. 

The company’s 3D sensing business is expected to continue to benefit from the Android market into the June quarter, Zhang said. The Android market will likely witness more meaningful 3D sensing growth in 2020, he said. 

Viavi supplies filters as well as diffusers to Android smartphones such as Huawei’s P30 Pro. The strong sell-through data for the P30 Pro — and Huawei increasing its 3D sensing component procurement — bode well for Viavi’s performance in the calendar second quarter, the analyst said.

In the iPhone market, Viavi could take share from Himax in 2020, Zhang said. 

“In addition, we see some initial market opportunities for the 3D sensing keyless door lock and LiDAS product for 2020, outside of the smartphone market." 

Price Action

Viavi shares were up 4.19 percent at $13.80 at the time of publication Friday. 

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Latest Ratings for VIAV

Apr 2019UpgradesUnderweightNeutral
Nov 2018MaintainsUnderweightUnderweight
Oct 2018Initiates Coverage OnBuy

View More Analyst Ratings for VIAV
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