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Oclaro Remains A Top Pick At MKM, Price Target Raised To $10

Shares of Oclaro, Inc. OCLR have more than tripled in price over the past year, widely outperforming all major stock indexes. However, after meeting with the company’s CEO and CFO, MKM Partners’ Managing Director Michael Genovese believes there's still room for upside.

Consequently, Oclaro remains not only Buy-rated at MKM, but also its top pick. In fact, the firm decided to boost its estimates and price target. The experts now see the stock trading at $10 within the next 12 months – up from a previous target of $8, and expect 2017 EPS of $0.41 on revenue of $548 million, and 2018 EPS of $0.58 on revenue of $614 million – a considerable increase from the previous estimates.

Why So Bullish?

Genovese then went into a few reasons for MKM’s bullishness on Oclaro. First off, demand still outruns supply, with Oclaro being sold out on several products for the next two to five quarters. And while Chinese demand is not a sure thing, they believe it could continue to expand for several years still.

The second big element driving the firm’s optimism is the company’s “impressive management.” CEO Greg Dougherty and CFO Pete Mangan managed to turn around a “struggling company burdened with lots of low margin legacy,” and still seem to remain “committed to maximizing share holder value and to leading Oclaro during the coming generation of 400G and above products.”

DateFirmActionFromTo
Aug 2016Cowen & CompanyInitiates Coverage onOutperform
Aug 2016Stifel NicolausMaintainsBuy
Jul 2016NeedhamUpgradesBuyStrong Buy

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