The analyst firm also lowered its price target for the company to $19 from $25. Analysts James Kisner and Jason North said that pricing pressure for Datacom optics "is 'brutal' right now' due to companies with "Spartan business models" and large footprints in China.
The analysts wrote, "We are downgrading Finisar from Buy to Hold given our checks suggesting: 1) a "brutal" pricing environment for datacom optics, particularly in China, as well as in Telecom in N. America; 2) worse than expected share for FNSR in 100G Datacom; 3) an inventory correction in China; 4) vertical integration risks from Huawei and Cisco; 5) Looming potential price pressure/share loss from numerous start-ups and potentially Intel as the market transitions to 100G."
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Separately, 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 some important positives, 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, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."