Bear of the Day: Alliance Fiber Optics (AFOP) - Bear of the Day
14 March 2014 - 7:31PM
Zacks
Alliance Fiber Optics (AFOP) is a $240 million
manufacturer of optical networking systems who reported another EPS
miss last month and slipped to a Zacks #5 Rank Strong Sell. Shares
then fell below the $14 breakout support level from last July and
have not been able to recover since.
Part of the problem for the company and investors is that there
is only one Wall Street analyst providing estimates. And when that
analyst gets the projections wrong, everyone is disappointed.
The other problem seems like a good one to have on the surface:
one of AFOP's big customers is Google (GOOG). And
after a quarterly sequential revenue ramp in 2013 of $12 million,
$19 million, and $23 million, things were looking pretty for the
company.
But the revenue decline in Q4 to $21.8 million, on top of
reliance for 42% of those sales from one customer, sent many
investors looking for fiber elsewhere.
Right now, the single covering analyst for AFOP is projecting
EPS of $1.19 for this year and $1.08 for next year, representing
33.7% growth in 2014 and a -9.25% setback in 2015.
Speaking of other sources of fiber for your portfolio, investors
may want to consider Finisar (FNSR), a $2.3
billion provider of fiber optic subsystems which enable high-speed
data networks.
FNSR just logged its first 2 back-to-back quarters of $1
billion+ in sales and is expected to grow EPS at 309% this year and
13% next year with new opportunities in the 100G landscape in
China.
Disclosure: I own shares of FNSR for the Zacks Follow The Money
Portfolio.
Kevin Cook is a Senior Stock Strategist for Zacks.com where he
runs the Follow The Money Portfolio.
ALLIANCE FIBER (AFOP): Free Stock Analysis Report
FINISAR CORP (FNSR): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
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