Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Infinera Is Flying High Today

By Brian Feroldi - Feb 8, 2018 at 4:03PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Traders cheer better-than-expected results and bullish guidance.

What happened

In response to the company reporting pleasant fourth-quarter results that featured bullish guidance, shares of Infinera (INFN 1.31%), a telecommunications equipment provider, rose 29% as of 3:25 p.m. EST on Thursday.

So what

Here's a review of the headline numbers from the fourth quarter:

  • Revenue jumped 8% to $195.8 million. That was above the high end of management's guidance range and far surpassed Wall Street's estimate.
  • Non-GAAP (generally accepted accounting principles) net loss was $18.6 million, or $0.12 per share. That also compared favorably to market-watchers' expectations of a $0.13 loss.

On the call with investors, CEO Tom Fallon credited the revenue beat to strong adoption of the company's next-generation ICE4 ("Infinite Capacity Engine 4") product line. Combining this with other favorable industry dynamics, management shared the following guidance for the upcoming quarter:

  • Revenue of $195 million to $205 million
  • A non-GAAP loss per share of $0.09 to $0.13

By contrast, Wall Street was only expecting $180 million in revenue and a net loss of $0.16 per share.

What's more, Infinera's CFO Brad Feller stated that he expects gross margins to improve throughout the year. He also said that double-digit revenue growth isn't out of the question.

Given the better-than-expected results and bullish guidance, it isn't hard to figure out why shares are flying high today.


Image source: Getty Images.

Now what

2017 was a rotten year for Infinera, so it is great to see the company projecting confidence about its near-term future. A part of that optimism likely stems from the news that internet streaming giant Netflix (NFLX 2.90%) has chosen to deploy Infinera's products to enhance its streaming capacity. Securing a high-end customer like Netflix should give investors confidence that Infinera finally has a product portfolio that will allow it to attract and retain new customers.

On the other hand, Infinera is still operating at a loss, and is expected to continue doing so for the next few quarters. Given the company's up-and-down history, I, for one, have no plans to chase this stock after today's monster move.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Infinera Corporation Stock Quote
Infinera Corporation
$5.43 (1.31%) $0.07
Netflix, Inc. Stock Quote
Netflix, Inc.
$179.95 (2.90%) $5.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.