The company has been growing substantially both in terms of revenue and gross margins

Published By: Eunice Gettys on January 11, 2017 07:57 am EST

Shares of Oclaro, Inc. (NASDAQ:OCLR) surged 3.26% in Monday's trading session to close at $8.54 following positive commentary from Needham & Company. The firm remained convinced with a Strong Buy rating and a price target of $14, implying 63.93% upside potential over Monday's closing price. The positive commentary was followed by an upbeat presentation of Oclaro CEO and CFO at the Needham Growth Conference.

Analyst Alex Henderson of Needham & Co. wrote in a note to clients that the company did not provide guidance update at the conference as it is scheduled to report second-quarter of FY17 at the end of January. “Oclaro is the market leader in 100G and above fiber optics that continues to benefit from the 100G super cycle. Particularly, Oclaro is the only volume producer for ACO CFP100G/200G products, producing thousands of units on a quarterly basis with its closest competitor producing only ~100 units quarterly,” he said.

 Financially speaking, Mr. Henderson said the company has shown substantial growth both in terms of gross margin and revenue. For the quarter ended September, OCLR revenue gre 55% year-on-year to $135 million, while gross margin doubled YoY. He also highlighted improving operating income from break-even in fiscal first quarter of 2016 to 15% in fiscal first quarter of 2017. In his view, the improved income is driven by both operating leverage and revenue growth.

The San Jose, California-based company has a total market valuation of $1.41 billion, with a 68.99 price to earnings ratio. The stock has a 52-week high of $10.19 and a 52-week low of $3.16. For the optical components manufacturer, nine analysts maintain a Buy rating, while one maintains a Hold as per FactSet data.