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Shares of Finisar ( FNSR ), a supplier of fiber optic networking devices to Google and Verizon Communications, jumped to a seven-month high after the company posted fiscal-third-quarter earnings late Thursday that topped views and forecast current-quarter revenue above the consensus estimate. A pick-up in demand for fiber optic devices from China could boost Sunnyvale, Calif.-based Finisar, analysts say. China Mobile ( CHL ) and other wireless firms are building out new networks. And China’s ZTE — the mobile gear maker which was the object of a U.S. government export ban this week for its sales to Iran — is not a “material” customer of Finisar, analysts say. Verizon ( VZ ), meanwhile, is among the U.S. telecom companies upgrading landline fiber optic networks in metropolitan areas to 100-gigabit-per-second technology. “Finisar reported solid fiscal Q3 results, with EPS coming in above Street expectations, and the company guided (current-quarter) revenue and EPS ahead of consensus estimates,” said Troy Jensen, a Piper Jaffray analyst, in a research report. “The upbeat fiscal Q3 results and forward guidance were driven by robust demand for 100G telco and datacom optics.” Finisar stock was up 18% in morning trading in the stock market today , near 17, as other fiber optic stocks also gained. Lumentum Holdings ( LITE ) advanced 1.5%, while Oclaro ( OCLR ), Viavi Solutions ( VIAV ) and Applied Optoelectronics ( AAOI ) were all higher by more than 1.5%. And while disappointing results at Ciena ( CIEN ) last week had led to sharp sell-off in fiber optic stocks, Ciena stock was up nearly 3% Friday morning. IBD’s Telecom-Fiber Optics group as a whole rose more than 3%. It ranks No. 81 out of 197 industry groups tracked. While phone companies such as Verizon have been the biggest customers of the fiber optic parts makers, Internet companies such as Alphabet ’s ( GOOGL ) Google, Amazon.com ( AMZN ) and Facebook ( FB ) are also boosting demand as they build new data centers . In its fiscal Q3 ended Jan. 31, Finisar said it earned 25 cents per share minus items, flat from the year-earlier period but topping analysts estimates of 22 cents. For the current quarter ending in April, Finisar forecasts profit of 22 cents to 28 cents, where analysts had modeled 21 cents. Finisar, which has a relatively weak IBD Composite rating of 45, said Q3 revenue rose 1% to $309.2 million, missing consensus estimates of $311 million. But for the current quarter, Finisar forecasts revenue of $317 million at the midpoint of its range, above the $315 million modeled by analysts. Merger talks between Finisar and Lumentum broke off last year, analysts said. Intensified competition has pressured the profit margins of fiber optic parts makers. “Finisar is seeing growth on a number of fronts; however, the increasingly competitive 100G datacom market holds us back for now,” said Jefferies analyst James Kisner, in a report. He has a neutral rating on Finisar stock. Image provided by Shutterstock . Scalper1 News
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