On Dec 13, we maintained our Neutral recommendation on
JDS Uniphase Corp.
). The company reported mixed financial results for the first
quarter of fiscal 2014. The bottom line was in line with the
Zacks Consensus Estimate while the top line surpassed the same.
Why Kept at Neutral?
JDS Uniphase's newly-launched products coupled with the
acquisition of Network Instruments and Arieso are the long-term
positives for the company. Moreover, higher Internet usage and
associated applications has spurred demand for components and
modules used in 3G/4G high-speed communication networks,
benefiting JDSU in the long run.
Moreover, growing demand for next generation pigment solutions
called SPARK, which is mostly used in banknote designs in nearly
44 countries, coupled with recent contract wins in Africa and
Latin America will continue to drive revenues for the company.
Furthermore, JDS Uniphase plans to take part in 100G adoption in
China, which we believe will open more avenues for the company.
However, on the downside, the ongoing global economic
fluctuations may significantly affect the prospects of JDS
Uniphase. Moreover, the consolidation trend of wireless networks
and data centers will worsen the situation.
The overall book-to-bill ratio of the company in the reported
quarter was below 1, mainly affected by reduced orders from the
North American region. Furthermore, in the last one year, the
stock price of JDS Uniphase soared 42% and is presently trading
at the high-end of 52-week high.
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JDS Uniphase currently has a Zacks Rank #4 (Sell).
Other Stocks to Consider
Other stocks that belongs to the sector include
TESSCO Technologies Inc.
). Currently, all three have a Zacks Rank #2 (Buy).