Rosenblatt Sets Expectations on Oclaro, Inc. (OCLR) Ahead of Upcoming Earnings


With Oclaro, Inc. (NASDAQ:OCLR) preparing to release fiscal third-quarter earnings on May 2, Rosenblatt Securities analyst Jun Zhang, weighed in today with a few insights.

In the March quarter, the analyst believes that Datacom contributed well to Oclaro due to strength, and Oclaro used a distribution channel for the optical modules for telecom. That said, Zhang expects the March quarter to come in-line, but remains cautious on Oclaro’s ability to meet June quarter expectations. The reason? The analyst expects Oclaro’s business in China to see a sequential decline quarter-over-quarter (QoQ) in the June quarter, and shipments to Huawei and ZTE to be down 20-30% and 15-20% QoQ, respectively.

Zhang noted, “We believe Oclaro shipped to ZTE based on their framework contract and maintained the monthly shipment volume to ZTE in the March quarter. However, we believe ZTE recently requested Oclaro to slow down their shipments in the June quarter due to an increasing inventory level, particularly for the CFP2 product.”

However, “We believe Datacom’s strength from the US market will partially offset weakness from China’s telecom market. Although the market currently expects June quarter revenue guidance to be slightly up QoQ, we believe there might be a small shortfall,” the analyst added

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jun Zhang has a yearly average return of -10.5% and a 44% success rate. Zhang is ranked #4143 out of 4571 analysts.

As of this writing, all the four analysts polled by TipRanks (in the past 3 months) rate Oclaro stock a Buy. With a return potential of 82%, the stock’s consensus target price stands at $14.33. 

 

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