Rosenblatt Sees Positive Trends For NeoPhotonics

A conference call with NeoPhotonics Corp (NYSE: NPTN) has reinforced Rosenblatt Securities' bullish stance on the stock. 

The Analyst

Analyst Jun Zhang maintains a Buy on NeoPhotonics with an unchanged $13 price target.

The Thesis

Shares of NeoPhotonics, a designer and manufacturer of optoelectronic solutions for the telecom and data center sector, drifted lower last week in reaction to reports of the arrest of Huawei CFO Meng Wanzhou.

Huawei is a client of NeoPhotonics, but one of the main takeaways from Rosenblatt's call is the company doesn't expect to see any near-term impact from the arrest, as its products are difficult to replace, Zhang said in a Monday note. (See his track record here.) 

Demand from the Chinese market remains strong, and this trend will likely continue next year due to 5G network deployment, the analyst said. 

Zhang named the following highlights from the conference call with the optoelectronics company:

• 400G and laser products should help lift gross margins, as business with Ciena Corporation (NYSE: CIEN) and Nokia Oyj (NYSE: NOK) remain solid.
• The optical market as a whole is likely to continue consolidating.
• NeoPhotonics' property asset value in China rose to $95 million in 2018. Its Japanese property value was $15 million as of a few years ago. 

Price Action

NeoPhotonics shares were up 0.39 percent at $6.46 at the time of publication Monday. 

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