Acacia Communications, Inc.
ZTE's Soft Guidance
Chinese telecom equipment maker ZTE Group, which is Acacia's top customer,
Dual Concerns For ZTE
Investors are also concerned about a potential ban of its products in the United States, as it invited the wrath of the U.S. government for not respecting the U.S. trade sanctions against Iran. Although the company is unscathed thus far due to a temporary pardon, customers are wary that anytime the feared development could materialize, scuttling its prospects.
ZTE reaped the benefits of the global thrust on 4G networks, supplying telecom equipment for the construction of base stations for the network. With most ground work on the 4G now complete, the company may soon see the advantage falling out of its equation.
ADVA Also Warns On Q4 Revenues
As if the Chinese hammering was not enough, another brewing storm hit Acacia as well. Germany's ADVA Optical Networking, which is Acacia's second-largest customer,
Acacia's over-reliance on a select few customers exposes the company to risks, as it gets 82 percent of its revenues from its top five customers.
Sector Moving In Tandem
Meanwhile, the Optical/Photonic sector is seeing weakness amid these warnings from customers. To take stock, below are a few stock moves in the sector at last check:
MKM Partners, meanwhile, is not too bothered about the weakness and recommends investors to buy the dip in some strong names in the sector such as Lumentum, Oclaro and Finisar.
At the time of writing, shares of Acacia were down 12.84 percent at $76.29.
|Sep 2016||Deutsche Bank||Maintains||Buy|
|Jul 2016||Deutsche Bank||Maintains||Buy|
|Jun 2016||Goldman Sachs||Initiates Coverage on||Neutral|
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