Infinera's price hike connects with investors

Investment Analysis Clubs Saul’s Investing Discussions
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To offer a song from the airways played during the late 70s (that just resurfaced in my head): “The jig is up the news is out they’ve finally found me.”

http://news.investors.com/technology/112315-782110-infinera-…

No sooner was its price target hiked than Infinera (NASDAQ:INFN) stock rose Monday. Someone must have been using fiber optic cable to spread the word.

Shares of the Silicon Valley maker of fiber optic connection gear rose to a two-month high and were up more than 1.5%, near 22, in afternoon trading in the stock market today. That’s 12% off an eight-year high above 25 touched on Aug. 18. Infinera is building the right side of a 68-day stage-one cup base with a possible 25.34 buy point.

Needham analyst Alex Henderson raised his price target to 25 from 24 and reaffirmed his buy rating on Infinera stock in a research note Monday. He said, “(We’re) feeling pretty good about Infinera and the overall (fiber) optical market.”

Infinera’s CloudXpress platform gear is among the beneficiaries of the rising flow of data among data centers, thanks to such Internet content providers as Facebook (NASDAQ:FB), Alphabet’s (NASDAQ:GOOGL) Google, Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Alibaba (NYSE:BABA) and others.

“Infinera is seeing solid demand conditions (and) strong uptake in the DCI (data center interconnect) market, and is starting to see the synergies from the Transmode acquisition (completed in the third quarter),” he wrote. “We expect Infinera to continue to expand revenues at double-digit rates and to expand gross margins and operating margins in CY16, CY17 and CY18.”

In addition to watching Infinera’s metro data centers connections “starting to build a head of steam” for 2016 and beyond, Henderson said, “Regional and long haul demand remains robust … (with) no slowdown in traffic growth, and recent results from the wholesaler market have been stronger than expected.”

The company’s shares gapped up 15% after Infinera issued fiscal Q3 earnings Oct. 27. EPS ex items doubled to 22 cents, and sales rose 34% to $232.5 million. Analysts had estimated 17 cents and $226.1 million. Infinera’s Q3 ended Aug. 20.

The company guided EPS and sales for its fiscal Q4, which ends Dec. 26, in line with analyst views.

In the past month, analysts have raised their fiscal 2015 consensus to 78 cents from 75 cents for EPS minus items, and revenue to $884.3 million from $882 million.

For 2016, analysts expect adjusted earnings of 97 cents a share, on sales of $1.13 billion.

Best,
–Kevin

14 Likes
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Hello Kevin,

Thanks for your posts on INFN. Today’s press release discussed the demonstration on Orange of the combined fibre/wireless “fronthaul”. I am familiar with backhaul and longhaul but not fronthaul.Thanks for any help you can offer.

Best regards,

Mike

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Hi Mike,

One can get lost in networking jargon as I’m well aware. Fronthaul is quite similar to backhaul, but the change in terminology largely corresponds to a change in network architecture. In some networks, wireless base stations contain the radio element as well as a baseband aggregation unit and in those cases where a fiber connection is not in place, they often make the mobile to fiber backbone connection over a wireless link and that is referred to as backhaul. In more remote environments, the base stations (or small cells as they might be referred to) only contain the radio piece. The connection between a centrally located baseband aggregation unit and these remote cell sites is referred to as fronthaul. It’s just an additional term necessitated by a different physical network architecture.

Regards,
Stan

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Hello Stan,

Got it. Thank you very much.

Best regards,

Mike