William Blair Thinks Acacia Communications’ Stock is Going to Recover

By Carrie Williams

In a report released yesterday, Dmitry Netis from William Blair reiterated a Buy rating on Acacia Communications (NASDAQ: ACIA). The company’s shares closed yesterday at $45.32, close to its 52-week low of $32.92.

Netis commented:

“Acacia Communications, Inc. Highlights From William Blair’s 37th Annual Growth Stock Conference President and Chief Executive Officer Raj Shanmugaraj and Chief Financial Officer John Gavin provided a company update at William Blair’s 37th Annual Growth Stock Conference. Key highlights are as follows:  With China visibility remaining front-and-center of Acacia story, management reiterated it expects to see stronger demand in the second half of 2017 compared with the first half. Management segments China demand into three buckets, which it calls “steady-state business,” “backbone expansion opportunity,” and “provincial network build.” Steady-state business includes ZTE’s (largest customer in China) ongoing metro projects in APAC and EMEA, where it generates a significant portion of its revenue and is seeing solid demand environment currently. India, for example, is a significant driver. Backbone network expansion opportunity, such as China Mobile, is starting to recover, according to management. The project delay for the next phase of backbone ring buildout that ZTE saw in April (discussed during Acacia’s first-quarter earnings) is expected to resume in late June, according to management. Management also clarified that the current China Telecom tender (part of Phase 12 buildout) is largely focused on metro ROADMs and will have minimal effect on Acacia; however, it expects additional tenders from CT to focus on coherent backbone interconnect. As for provincial networks (Phase 13 projects), management anticipates over 20 provinces served by China Mobile and China Telecom to each put out tenders starting in the second half of the year, though timing, it notes, remains uncertain.”

According to TipRanks.com, Netis is a 4-star analyst with an average return of 8.8% and a 54.4% success rate. Netis covers the Technology sector, focusing on stocks such as Interactive Intelligence, Juniper Networks, and Vonage Holdings.

Currently, the analyst consensus on Acacia Communications is Moderate Buy and the average price target is $59.20, representing a 30.6% upside.

In a report issued on May 30, Needham also reiterated a Buy rating on the stock with a $65 price target.

Based on Acacia Communications’ latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $115 million and quarterly net profit of $35.71 million. In comparison, last year the company earned revenue of $84.49 million and had a net profit of $4.03 million.

Based on the recent corporate insider activity of 79 insiders, corporate insider sentiment is negative on the stock.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

Acacia Communications, Inc. is a holding company. The company engages in the provision of developing transreceivers for optical networking applications. Its solutions enable the transport of signals over existing fiber infrastructures by applying modulation techniques and detection. The company’s products include ac100-msa, ac100-g, s, c; ac100-cfp, ac100-cfp-m, zr,l; cfp2-dco, ac100-cfp2-m, dci; cfp2-aco; and ac400 flex, ac400-u, s, ul. Acacia Communications was founded by Mehrdad Givehchi, Benny P. Mikkelsen, and Christian J. Rasmussen in June 2009 and is headquartered in Maynard, MA.