GigOptix Initiated At Barrington, Shares Rise

Shares of GigOptix Inc (NYSE: GIG) rose more than 3 percent on Tuesday, after Barrington Research initiated coverage on the stock at Outperform, setting a 12-month price target of $2. Analyst Ted Moreau provided some investment highlights in the report.

GigOptix has exposure to both telecom service provider optical networks and datacom (data center) networks. Both of these growing industries provide a strong tailwind for the overall optics industry.

The company constantly looks for opportunities to scale its business. In its most recent earnings call, management said the company will continue to seek acquisition targets. The analysts see GigOptix looking at market adjacencies and complementary technologies.

"With a successful track record integrating a variety of acquisitions in the past and a philosophy of acquisitions that are accretive shortly after a deal closes, we have a favorable view of GigOptix ability to add value to their operations," the note said. "We also believe it is in the best interests strategically of management to increase the size of their company in order to have the scale necessary to sufficiently invest in their business in order to remain competitive."

Barrington also highlighted that the stock is underappreciated at current levels, trading at only 1.0 times the company's sales.

"With a positive pre-announcement last week starting 2015 on the right foot, we expect 2015 to be another solid year for the company. We believe investors will eventually take notice that financial improvements should continue in 2015, expanding the sales multiple from a modest 1.0x our 2015 sales estimate of $37.88 million."