Why Finisar (FNSR) Stock Is Falling In Pre-Market Trading

NEW YORK (TheStreet) -- Shares of Finisar Corp.  (FNSR) are down 23.17% to $19.36 in pre-market trading on Friday.

Jefferies (JEF) cut its price target on the shares to $25 from $30 following Finisar's fourth quarter earnings release.

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Finisar issued lower guidance for the first quarter of fiscal year 2015 projecting 30 cents to 34 cents per share, versus Jeffries' consensus of 41 cents per share.

TheStreet Ratings team rates FINISAR CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate FINISAR CORP (FNSR) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, reasonable valuation levels and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 23.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although FNSR's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.38, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 750.00% and other important driving factors, this stock has surged by 92.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 894.3% when compared to the same quarter one year prior, rising from -$3.41 million to $27.06 million.
  • You can view the full analysis from the report here: FNSR Ratings Report
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