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Investing.com - B.Riley has upgraded Viavi Solutions (NASDAQ:VIAV) from Neutral to Buy and raised its price target to $18.00 from $12.00, citing significant tailwinds from the ongoing secular growth cycle in artificial intelligence and data centers. The new target represents potential upside from the current price of $13.98, with analyst targets ranging from $12 to $17. According to InvestingPro data, the stock has surged 47.94% over the past year, significantly outperforming the broader market.
Viavi reported fiscal first quarter revenue of $299 million and earnings per share of $0.15 on Wednesday, exceeding consensus estimates of $294 million and $0.13 respectively. The company’s revenue increased 25.6% year-over-year, partially aided by its Inertial Labs acquisition. This performance aligns with InvestingPro data showing that four analysts have revised their earnings upwards for the upcoming period, and net income is expected to grow this year.
The strength in Viavi’s performance was primarily driven by fiber optics solutions for AI/data centers and aerospace/defense sectors. The optical industry is experiencing strong demand as hyperscalers rapidly build AI infrastructure, benefiting Viavi as a major supplier of optical testing solutions.
B.Riley believes Viavi represents a better investment opportunity than transceiver companies like Coherent (NASDAQ:COHR), which the firm rates as Neutral with an $85 price target. The analyst firm notes that the shift to co-packaged optics (CPO) could be a headwind for transceiver companies, potentially reducing their dollar content.
The firm expects Viavi’s accelerating revenue to fuel a multiple expansion, with additional growth likely coming from the company’s timely acquisition of Spirent’s high-speed testing business.
In other recent news, Viavi Solutions reported fiscal first-quarter results that surpassed expectations. The company announced adjusted earnings per share of $0.15, exceeding analyst estimates of $0.13. Revenue for the quarter increased by 25.6% year-over-year, reaching $299.1 million, which was significantly higher than the consensus estimate of $275.64 million. Additionally, Viavi Solutions’ non-GAAP operating margin expanded to 15.7%, an increase of 570 basis points compared to the same period last year. These results led the company to issue strong guidance for the upcoming periods. The positive earnings and revenue performance have drawn attention from investors and market analysts. The recent developments highlight the company’s robust financial health and operational efficiency.
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