Keep in mind, the stock trades at an average volume of 140,000 shares per day -- contrast with Avanex Corp. (Nasdaq: AVNX), which clears 2 million per day -- so it's easy to create big run-ups and run-downs. A lot of the optical components stocks are like that; it's an extra layer of volatility in what's already an unpredictable sector. (See Finisar: Another Down Day.)
Apparently the catalyst today is an upgrade by Sam Dubinsky at Oppenheimer & Co. Inc. . He issued reports on pretty much every optical stock today, going with the theme that the market is being too pessimistic on the sector.
Optium is the one that got the upgrade, though -- to "Outperform," from "Perform," with a 12-month price target of $10. "We believe 2008 will be a very strong year for the company based on improving demand for 10 Gbit/s and emerging ROADM and 40 Gbit/s product cycles," he writes.
Is that worth a 20 percent jolt? Considering the stock lost two thirds of its value during the past year, maybe so.
Along similar lines, Oplink Communications Inc. (Nasdaq: OPLK) is down $1.50 (11.7%) at $11.38 on an Oppenheimer downgrade, to "Perform" from "Outperform." Dubinsky's worried about the ROADM business in Oplink's case, and he thinks the task of integrating Optical Communication Products Inc. (OCP) (Nasdaq: OCPI) could slow Oplink's progress. (See Oplink & OCP Seal Deal.)
— Craig Matsumoto, West Coast Editor, Light Reading