Finisar Stock Runs Into Familiar Resistance After Earnings

Most brokerage firms are upbeat toward underperforming FNSR stock

Managing Editor
Jun 15, 2018 at 10:14 AM
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Finisar Corporation (NASDAQ:FNSR) reported its first-quarter financial results last night. While revenue arrived in line with estimates, the fiber optic name's adjusted earnings came in below the consensus forecast.

The results have sparked mixed reaction from the brokerage bunch. While D.A. Davidson issued a price-target hike to $26 from $22, Raymond James and Craig-Hallum lowered their FNSR price targets to $19 and $23, respectively. Echoing this, Loop Capital said current-quarter guidance was disappointing, and it felt "inclined to sit on the sidelines for now," though it did raise its price target by $1 to $19.

At last check, FNSR stock was up 2% to trade at $18.0. The shares are being contained by their 30-week moving average, which has ushered Finisar lower since last March. Plus, the equity has shed nearly 30% in the last 12 months.

FNSR shares could be ready resume their longer-term downtrend, should upbeat analysts start to change their tune. Of the 11 brokerages covering FNSR, six rate it a "buy" or "strong buy," with not a single sell on the books. Furthermore, the consensus 12-month price target of $21.50 represents a roughly 20% premium to the stock's current perch. 

Traders wanting to bet on short-term headwinds for Finisar may want to do so with options. The equity's 30-day at-the-money implied volatility of 36% ranks in the 1st percentile of its annual range, meaning extremely low volatility expectations are being priced into near-term contracts.

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