Image source: Finisar.

What happened

Shares of Finisar Corporation (FNSR) jumped 40.7% in the month of September, according to data provided by S&P Global Market Intelligence, on the heels of the optical communication component specialist's strong quarterly report and multiple subsequent analyst upgrades.

So what

First, Finisar jumped more than 13% on Sept. 9, 2016, after the company announced stronger-than-expected fiscal first-quarter 2017 results. Quarterly revenue climbed 8.7% year over year, to $341.3 million, and translated to 65.2% growth in adjusted net income per share, to $0.38. Both figures easily exceeded the midpoints of Finisar's guidance ranges, which called for revenue of $323 million to $343 million, and adjusted earnings per share of $0.27 to $0.33.

If that wasn't enough, multiple analysts soon chimed in to express their bullishness. The same day, for example, MKM Partners increased their rating on Finisar stock to buy from neutral, and simultaneously increased their per-share price target to $35 from $21.

William Blair analyst Dmitry Netis also upgraded his rating on Finisar to outperform from market perform. Netis elaborated that Finisar's improved product mix was helping prop up margins, "leaving us optimistic the company can overcome annual telecom price negotiations in the second half of the year or improve margins further as new growth products and volumes expand. 

Now what

That's fair enough considering Finisar CEO Jerry Rawls pointed out that margins "improved significantly" during the quarter thanks both to favorable product mix and volume leverage from the company's vertically integrated manufacturing infrastructure.

And Finisar isn't sitting on its heels regarding new products. Over the past month alone, the company has unveiled a new family of high-bandwidth OIF Micro-ICR Class 40 receivers, a new portfolio of extended-reach 100 Gb/s optical modules for enterprise and hyperscale data centers, and showcased an industry-first demo of interoperable 100G SWDM4 optical tranceivers with partner Lumentum Holdings.

In the end -- and with the caveat that I'm content watching from the sidelines after last month's hefty pop -- given Finisar's relative outperformance last quarter, subsequent praise from Wall Street, and growing slate of compelling new products, it's no surprise to see the market so aggressively bidding up shares lately.