Nassarius Capital
Long/short equity

NeoPhotonics: Blossoming In The Need For Speed

(Editor's note: Investors should be aware that NeoPhotonics has delayed in the filing of its 10-Q.)

Executive summary:

  • Investors are underestimating the strength of U.S. 100G telecom deployments (metro included) and the magnitude of China's 4G LTE rollout
  • NPTN's leverage to 100G (> 40% of CY14E revenue) and China's rollout (~50% of revenue based in China) is unappreciated
  • The delay of a 10-Q filing is causing undue pressure on share price
  • At .57x EV/forward sales and 16% of MV in net cash, there should be limited downside
  • We see potential upside of >50% on a comparables basis

Under-appreciation for NeoPhotonics's leverage to 100G telecom and China's fledgling 4G LTE rollout, coupled with uncertainty from a yet to be filed third...

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