Viavi Solutions stock falls on weak fourth-quarter guidance

Investing.com -- Shares of Viavi Solutions (NASDAQ:VIAV) tumbled 14% today as the company released its third-quarter fiscal 2025 results, which included a lower-than-expected guidance for the fourth quarter.

The optical network and service provider reported third-quarter earnings per share (EPS) of $0.15, surpassing analyst estimates by $0.03. Revenue for the quarter was $284.8 million, slightly above the consensus estimate of $282.13 million. Despite these figures, the company’s stock fell due to its fourth-quarter guidance, which projected EPS of $0.10 to $0.13, below the consensus estimate of $0.14, and revenue forecasts of $278 to $290 million, compared to the expected $293.6 million.

The third-quarter results showed a robust year-over-year (YoY) growth with net revenue up 15.8%, GAAP operating margin increasing by 780 basis points (bps), and non-GAAP operating margin up by 740 bps. GAAP net income rose by 179.3% YoY, and non-GAAP net income increased by 156.8% YoY. The company attributed its strong performance to the success in its Network Enablement (NSE) and Optical Security and Performance Products (OSP) segments.

Despite the positive results, the company’s guidance has led to a bearish sentiment among investors. Analysts have weighed in on the guidance, with Susquehanna maintaining a neutral stance and a price target (PT) of $10. They noted that the outlook fell short due to an expected quarter-over-quarter pullback in Fiber Lab and Production. However, they also mentioned the second half of the calendar year 2025 (2HCY25) looks more promising with a reacceleration driven by NEM, along with an expected resumption of 5G buildout and stabilizing anti-counterfeiting demand.

Stifel, with a buy rating and a PT of $13, acknowledged the strong results but pointed out that they are overshadowed by a cautious outlook. They maintain their medium-term thesis on Viavi Solutions, expecting fiber lab and production to continue as a growth driver and stabilization in service provider spend to support a recovery to mid-single-digit revenue growth in fiscal 2026.

Rosenblatt Securities, also with a buy rating, adjusted their PT to $13.50 from $12, noting that Viavi is the first company in their coverage to provide a more cautious June quarter outlook due to tariffs. They added that this conservative outlook aligns with the management’s nature.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.