Infinera Offers A Healthy Structural Sales Growth, Margin Expansion Story

Nomura analyst Jeffrey Kvaal believes Infinera Corp. INFN offered a health structural sales growth. The analyst also expects the company's margin expansion story to help its bottom line in the upcoming years. As a result, the analyst initiated the stock with a rating of Buy with a price target of $17. It meant the stock provided 28.2 percent upside rewards based on Thursday's closing price.

The brokerage said Infinera's PIC chip has driven share gains in a growing optical market. This included the rapidly expanding webscale customers. Kvaal also expects emerging webscale competition and weakness as a key customer mar the current year's story.

However, the analyst commented, "we believe INFN's 1Q reset has de-risked estimates, providing an attractive multiple for an entry point." Accordingly, the revised fiscal year 2016 EPS estimation is $0.85 and for the fiscal year 2017, the analyst project $0.91.