Needham raised its price target for Oclaro to $3.75 from $3 in a note to investors Wednesday. The analyst firm reiterated its "buy" rating for the semiconductor company.
About 1.9 million shares of Oclaro were traded by 12:05 p.m. Wednesday following the price target increase, well above the company's average trading volume of about 993,000 shares a day.
Oclaro is U.S.-based company that provides optical communications and laser components, modules and subsystems for fiber-optic communication networks for the telecommunications, industrial, scientific, consumer electronics, and medical markets. The company's products include tunable laser, lithium niobate external modulators, receivers, transceivers, and transponder modules
TheStreet Ratings team rates OCLARO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate OCLARO INC (OCLR) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for OCLARO INC is rather low; currently it is at 20.37%. Regardless of OCLR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, OCLR's net profit margin of -12.26% significantly underperformed when compared to the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Communications Equipment industry and the overall market, OCLARO INC's return on equity significantly trails that of both the industry average and the S&P 500.
- OCLR, with its decline in revenue, underperformed when compared the industry average of 1.4%. Since the same quarter one year prior, revenues fell by 13.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.42, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that OCLR's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.10 is high and demonstrates strong liquidity.
- Looking at where the stock is today compared to one year ago, we find that it is higher, and it has outperformed the rise in the S&P 500 over the same period. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.
- You can view the full analysis from the report here: OCLR Ratings Report