Can Finisar (FNSR - Get Report) maintain its momentum?

Investors are poised to find out Thursday when the optical networking components company reports third quarter fiscal 2016 earnings after the closing bell.

Finisar, headquartered in Sunnyvale, Calif., makes networking equipment that is used in both wired and wireless systems for large telecom carriers like AT&T (T - Get Report) . And its products have been an important part in the buildout of various high-speed 4G LTE networks. In other words, you can thank Finisar because your smartphone can download data at fast speeds and doesn't lock up when you watch videos.

With smartphones and other devices becoming more like computers, and with consumers desiring faster speeds to stream music and movies, this bodes well for Finisar's growth prospects. Why? Obviously, the networks that support these streams will need upgrading, meaning these telecoms will come to Finisar for more of its components. And for this reason, investors should expect upbeat guidance when the company announces its results.

For the quarter that ended in January, the average analyst earnings estimate calls for 22 cents per share on revenue of $311.97 million, compared with the year-ago quarter when the company earned 25 cents per share on $306.28 million in revenue. For the full year, ending in April, earnings are projected to be 91 cents per share, down from $1.04 a year ago, while full-year revenue of $1.26 billion would mark a year-over-year rise of 0.8%.

In its fiscal second quarter, Finisar posted strong revenue, thanks to better-than-expected demand for its networking hardware from the telecom sector. The company, while citing healthy demand from China, projected solid sequential revenue growth, owing to increased telecom spending for the just-ended quarter. This prompted analyst Alex Henderson at Needham & Co., who has a buy rating and $18 price target, to note "the bad news appears to be over for Finisar."

In that vein, with the better-than-expected earnings result and guidance recently released from optical networking company Broadcom (AVGO - Get Report) , combined with solid results from Infinera  (INFN - Get Report) , the optimism for Finisar seems justified.

In my view, betting on a higher consumer demand in the optical networking components space now makes sense. And despite already strong 20% and 10%, respective 3-month and 1-month gains from Finisar stock, the shares should be owned ahead of Thursday's results.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.