What happened

Shares of Finisar (NASDAQ:FNSR) rose 13.2% in February 2017, according to data from S&P Global Market Intelligence.

So what

The bulk of Finisar's February surge started when chief rival Lumentum (NASDAQ:LITE) delivered a strong earnings surprise, followed by several rosy analyst reviews. Lumentum's solid results led investors to optimistic conclusions about the many target markets these two companies have in common, and Finisar's gains nearly matched Lumentum's post-earnings surge.

Fiber optic cables and connectors.

Image source: Getty Images.

Now what

As it turns out, some of those gilded conclusions that were drawn about Finisar's target markets may have been misplaced. The company reported its own third-quarter results on Thursday, falling short of Wall Street's updated sales and earnings targets. The report quickly erased all of February's gains and then some.

That being said, Finisar's adjusted earnings more than doubled year over year on 23% stronger sales. It was a disappointing report only in the light of sky-high expectations, and a solid effort in its own right. Management reported strong demand for high-end fiber optic network switches and multiplexer devices, as telecoms and network equipment makers alike prepare for another wave of infrastructure upgrades.

Even after this harsh reaction to the third-quarter update, Finisar shares still trade at more than double their year-ago prices. Don't cry for Finisar investors -- the best may be yet to come.

Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.