- Optical component stocks are back on the rise today, recouping some ground lost in declines yesterday, as D.A. Davidson weighs in anew on the sector.
- The firm initiated Finisar (FNSR +0.6%) and Applied Optoelectronics (AAOI +4.8%) at Buy, pointing to "compelling" valuations, and started coverage on NeoPhotonics (NPTN -7.3%) at Neutral.
- It has a target price for Finisar of $40, implying 51.5% upside, and for Applied Optoelectronics of $95, also implying 51% upside.
- Finisar has a "building presence in China that should drive strong growth" by the end of the year, along with solid OEM partnerships, writes Mark Kelleher. For its part, Applied Opto will see a favorable margin mix shift from smaller form factor transceivers as they grow.
- His target on NeoPhotonics is $9, implying 11% upside from yesterday's close (and nearly 20% upside from today's lower price).