Acacia: Head in the cloud

Another cloud play worth considering…

fast-growing 2016 tech new issue Acacia Communications (ACIA) is a key player in the cloud computing space.

Netflix (NFLX), Facebook (FB), Apple (AAPL), (AMZN), Alphabet (GOOGL) and countless others are putting increasing demands on high-speed cloud networking to power their mobile apps, video streaming and Internet of Things (IoT) technology. That bodes well for Acacia, which develops high-speed interconnect modules for cloud infrastructure operators and communication service providers.

Explosive Earnings & Sales Growth

Acacia’s Q1 sales growth of 79% earns it a spot among the four stocks on IBD’s Tech Leaders screen with the biggest year-over-year quarterly gains, along with NetEase (NTES) (108%), Paycom Software (PAYC) (63%) and Facebook (52%).

The Massachusetts-based company also sports a three-year annual EPS growth rate of 237%. At the end of this month, it’s expected to post its first earnings report since going public in May.

Acacia’s 99 Composite Rating ranks No. 1 within the fiber optics industry group, and demand for its shares is reflected in its 2.1 up/down volume ratio

And another article…

Have you ever stopped to think about what it takes for your smartphone or laptop’s data to be transmitted? Every web search, Facebook post, Netflix binge-watch session and file sent to the cloud requires powerful data networking equipment in order to work.

And with global data center and internet traffic expected to grow at compound annual growth rates of more than 20% through 2019, the need for speed – as bandwidth demand rises – is mounting.

Acacia Communications (ACIA), which went public nine weeks ago in May after creating the first device of its kind capable of transmitting at 100 gigabits or more, is leading the charge. The Maynard, Mass.-based company makes high-speed optical interconnect modules for use in long-haul global markets, metro local markets and connecting data centers.

What makes Acacia unique is its use of silicon in its photonic integrated circuits (PICs), which improves performance and capacity at a smaller package size, and reduces associated costs. These modules also can be integrated easily with customers’ existing network equipment

Shanmugaraj (CEO) says he’s bullish on the Asian market, which captured a 65% revenue gain to $89.3 million in 2015, as telecom firms there are investing in 100G-speed networks.

Sales from the Europe, Middle East and Africa region made up the bulk of the company’s $239 million in sales last year, with a 72% increase to $103 million.

Analysts say the young company still has a lot of room to grow. Deutsche Bank’s Vijay Bhagavath sees potential for share gains in underpenetrated end-markets, and expects Acacia’s customer mix to shift to “higher-volume and higher-spending intensity buyers.” That includes the likes of Cisco Systems (CSCO), Amazon (AMZN), Microsoft (MSFT), Facebook (FB), Google-owner Alphabet (GOOGL), Netflix (NFLX), AT&T (T) and Comcast (CMCSA), beginning in fiscal 2017.

Lots of growth being driven by China, numerous suppliers ‘sold out’ on critical product lines, according to an analyst.
but the future growth is also going to be heavily driven by metro core upgrades

  • tell that to INFN!

Cowen analyst Paul Silverstein says Acacia’s existing customer base is “impressive.” Some of its biggest clients are network equipment telecom vendors ADVA Optical Networking, based in Munich, Germany, and privately held Coriant

Acacia has expanded its customer count from five at the end of 2010 to 25 through March of this year. Since the company does not yet have a very large set of customers, the loss of one could potentially impact its financial results

Still, Silverstein calls Acacia a technology pioneer compared with the rest of the industry, which uses indium-phosphide technology for the fabrication of optical interconnect modules

The company plans to introduce products for the 400G market, which the analyst believes “will continue to drive the long-term competitive advantage for Acacia.” and these are expected to increase gross margin.

Earnings due in a couple weeks.



Acacia Communications (ACIA) romped to another new high despite a failed breakout. Shares rose 5%, bringing its two-session gain to 17%. The highly regarded new issue tried to clear an entry at 43.20, but a weak market wouldn’t let it. It’s now broken out past a 45.85 buy point.

A bit late to jump in now.

(Long ACIA)

A bit late to jump in, huh?

Yep. need to wait for another base.