Last week was a heavy week of optical news; CIEN (the equipment company) and FNSR (the component company, competitor to LITE) both reported. I am most interested in these EPS calls/reactions for a potential LITE mosaic.
CIEN looks like it continues to be base building. As I mentioned on twitter feed, CIEN expectations were ahead of themselves, and similar to LNKD earlier in 15, CIEN set the bar low for the fiscal year to come. I will be looking to see if CIEN makes any base bottoming formations. So far, I don't see a clear one. The more a trader can look for the cleanest and best set ups, the better.
FNSR beat low expectations. People have worried about share loss, their unexpected CEO transition, and increased competition in the data space where they have more exposure. The stock had a great EPS reaction. Sentiment was poor. FNSR is still the laggard in component space. They could benefit from consolidation in this space. Hopes were high for industry consolidation in last year. It seems like consensus has fallen on that front even though FNSR is in a CEO search and LITE has been separated from VIAV for 3 months.
Overall, I heard nothing on the CIEN/FNSR EPS calls to deter me from a group thesis that there is a 16/17 cycle coming for this group and the best positioned companies. LITE has the potential to be one of those. I am doing more work on LITE. I have tweeted out what I know on fundamentals so far. Its IBD composite rating has increased to 75 with its EPS and RS ratings both increasing. I hope to post in the next week or 2 on the next round of work I am doing on LITE as it looks to be building a handle and it has some promise.
Disclosure: I do have a position in LITE.
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