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Why NeoPhotonics Stock Sank Today

By Steve Symington – Updated Apr 9, 2019 at 4:53PM

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Solid quarterly results were overshadowed by disappointing forward guidance. Here's what NeoPhotonics investors need to know.

What happened

Shares of NeoPhotonics (NPTN) were down 8.8% as of 3 p.m. EST Friday after the optoelectronic solutions company announced strong fourth-quarter 2018 results, but followed with disappointing forward guidance.

On the former, NeoPhotonics' quarterly revenue grew 19% year over year to $91.1 million, translating to adjusted (non-GAAP) net income of $2.4 million, or $0.05 per share, swinging from a $0.05-per-share loss in the same year-ago period. Analysts, on average, were expecting earnings of only $0.02 per share.

Stock market data and chart indicating losses


So what

NeoPhotonics chairman and CEO Tim Jenks noted that strong orders and shipments resulted in the company's highest quarterly revenue in two years.

"With continued strength in demand, combined with increasing volume growth across leading high speed product lines, we again achieved solid gross margin expansion," Jenks added.

Click here for the latest earnings call transcript for NeoPhotonics.

Now what

Even so, for the first quarter of 2019 NeoPhotonics expects revenue in the range of $77 million to $82 million, which should translate to an adjusted net loss per share of $0.17 to $0.08. Analysts, on average, were expecting a narrower net loss of $0.07 per share on revenue just above the midpoint of NeoPhotonics' guidance range.

In the end, that light outlook obviously left the market wanting more, and NeoPhotonics stock is understandably pulling back in response.

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

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