Today’s Research Reports on Stocks to Watch: Acacia Communications and Oclaro
Shares of optical names such as Acacia Communications and Oclaro were deep in the red on Monday after the U.S. banned any exports from America to Chinese telecom gear maker ZTE Corp. Other optical stocks that plunged were Lumentum and Finisar.
RDI Initiates Coverage on:
Acacia Communications, Inc.
Acacia Communications, Inc. shares closed down a colossal 35.97% yesterday and hit a new low of $24.72. The big drop came after the U.S. Department of Commerce said that it would block ZTE, a major telecommunications Chinese company, from importing components from U.S. companies for seven years. MKM Partners analyst Michael Genovese, who rates Acacia as "neutral," has said that the ban is a "negative" for the company. According to Acacia’s latest annual report, a staggering 30% of its revenue came from ZTE in 2017. Genovese has said that other companies may be better positioned because they also sell to other customers like Nokia Corp. and Huawei, which Acacia has limited exposure to. Genovese however has also argued that other stocks falling as a result of sympathy with Acacia could be overblown. Acacia will be releasing its first quarter 2018 results on May 3rd.
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Oclaro, Inc. shares were hammered on Monday and closed down 15.18% on nearly 22 million shares traded. The optical company was one among a few that saw their shares bleed after the United States blocked Chinese telecommunications-gear maker ZTE Corp. from exporting sensitive technology from America. The U.S. Commerce Department said on Monday that it would ban American companies from supplying components to ZTE Corp. for seven years. The fact that ZTE Corp. is a big customer for optical companies in the U.S., the news didn’t bode well with investors. According to MKM Partners analyst Michael Genovese, there is buying opportunity with Oclaro. Genovese has said that Lumentum is in the process of acquiring Oclaro and he doesn’t see Lumentum lowering its offer price. He also wrote, "Huawei is closely associated with the Chinese government, and Huawei and ZTE strongly dislike each other according to our checks. We do not think Huawei or the Chinese government are overly concerned about U.S. sanctions against ZTE.”
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Our Actionable Research on Acacia Communications, Inc. (NASDAQ: ACIA) and Oclaro, Inc. (NASDAQ: OCLR) can be downloaded free of charge at Research Driven Investing.
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