Oclaro, Inc. (NASDAQ:OCLR)
Oclaro, Inc. (NASDAQ:OCLR) had previously been the subject of talk concerning a takeover or merger. However at the conclusion of the industry’s Optical Fiber Communication exhibition, held in Los Angeles, analysts came away commenting that nothing appears imminent. Normally speculation regarding a merger or takeover is cause for a company’s stock value to rise. Often when such speculation is proved false, the stock’s value recedes. However today OCLR is up almost 7%. Further, OCLR hit $8.02 just last week and is now trading over $10.
San Jose, CA-based Oclaro, Inc. (NASDAQ:OCLR) develops and manufactures optical components, modules, and subsystems for networks and data centers that will enable the next generation of streaming video, cloud computing, VOIP, and other high-speed applications.
In 2016 there was movement in the sector leading to a possible merger between Finisar (FNSR) and Lumentum Holdings (LITE). Such a deal made sense when considering the industry’s competitive pricing pressures and the duplication of research and development efforts and expenses. However, that deal is now said to be not moving forward. Consequently, given the economies of scale a merger could bring, Oclaro, Inc. (NASDAQ:OCLR) is now rumored to be in position to be the next M&A target for Finisar. That deal is not imminent though. As a matter of fact, a highly placed Oclaro executive stated “companies get bought, not sold”.
Oclaro, Inc. (NASDAQ:OCLR) is well positioned to continue on its own. Of the ten Wall St. firms that cover the company, nine rate OCLR shares as a “Strong Buy” and one rates the shares as a “Buy”. Their consensus price target is over $14. EPS for OCLR shareholders has been trending upwards. In 2013 Oclaro reported an EPS loss of -$1.37 and that loss reduced each year and in 2016 Oclaro produced an EPS profit of $0.08.
Shares of OCLR are trading above their respective 20, 50, and 200-day moving averages. Even though OCLR shares have seen wide price swings on an inter-day basis, 69% of the shares are owned by institutions. Institutions typically are long-term holders of any shares they own. On the other hand, OCLR shares are heavily shorted. 16% of the share float is represented by shares being held short. Still, Oclaro, Inc. (NASDAQ:OCLR) has performed well YTD by gaining almost 7%. For the quarter, OCLR shares are up 5.5%.
|Last Price a/o 11:57 AM EST||$ 10.18|
|Market Cap (mlns)||$ 1,590.00|
|Shares Outstanding (mlns)||166.59|
|Share Float (mlns)||157.9|
|Short Interest Ratio||2.78|
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.
About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.