Finisar Woos Wall Street
Finisar shares were trading at $14.25 midday, up 6.5 percent from the start of the session, as the broader market is trending downward.
Needham & Co. today upgraded Finisar to a Buy from a Hold, citing improving market conditions for IT spending in general as well as new opportunities for Finisar to gain share in optical transceivers.
Just last week, Finisar was upgraded to a Buy from a Hold by Credit Suisse First Boston (see Finisar Flies on CSFB Upgrade). CSFB said Finisar has an impressive backlog of orders through April.
Mark Langley, a principal analyst at Needham, says the main reason behind the upgrade is that he sees a spending uptick in the overall SAN sector through 2002. More specifically, he notes that Finisar has a new opportunity to sell components to IBM Corp. (NYSE: IBM), since IBM’s optical transceiver business was bought in December by JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) (see JDSU's Bid for the Enterprise).
“It’s possible they could start to sell to IBM, because [the optical transceiver unit] was captive under IBM,” Langley says.
He also says Finisar has just started to penetrate two major accounts, Cisco Systems Inc. (Nasdaq: CSCO) and McData Corp. (Nasdaq: MCDT).
— Todd Spangler, Senior Editor, Byte and Switch