What happened

Shares of NeoPhotonics (NYSE:NPTN) rose 38% in August, according to data from S&P Global Market Intelligence. The maker of optoelectronic components for fiber-optic networking equipment crushed analyst expectations in last month's second-quarter earnings report.

So what

On Aug. 6, NeoPhotonics reported a net loss of $0.14 per share on sales of $81.1 million. Your average Wall Street firm would have settled for a $0.20 loss per share and revenue in the neighborhood of $74 million. The stock closed 21% higher the next day followed by another 7% surge over the next two days as analysts released their analyses of NeoPhotonics' report.

Technician pluggin in fiber-optic networking cables into a large switch or router.

Image source: Getty Images.

Now what

The company saw strong order volumes in North America and Europe along with signs of recovery in the struggling Chinese segment. There, NeoPhotonics should benefit from having networking giant ZTE get back to business after regulators effectively shut down its component supplies in April. ZTE is one of NeoPhotonics' largest clients.

Looking ahead, management set third-quarter guidance targets in line with the then-current analyst view, noting that the forecast did not include any shipments to ZTE and its supply pipeline partners. Operating profit should hit the breakeven point in the fourth quarter, which hasn't happened since the fourth quarter of 2016. NeoPhotonics runs a lean operating ledger, with bottom-line results sticking close to the operating line, so positive earnings shouldn't be far behind.

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