Please ensure Javascript is enabled for purposes of website accessibility

Why NeoPhotonics Stock Tanked Today

By Evan Niu, CFA – Aug 5, 2020 at 2:06PM

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

The optical networking specialist reported quarterly results and issued mixed guidance.

What happened

Shares of NeoPhotonics (NPTN) have tanked today, down by 14% as of 12:50 p.m. EDT, after the company reported second-quarter earnings. The results beat expectations but NeoPhotonics' profit guidance fell short.

So what

Revenue in the second quarter was $103.2 million, ahead of the $99.2 million that analysts were looking for. That resulted in adjusted earnings per share of $0.16, also beating the consensus estimate of $0.12 per share in adjusted profits. The optical networking technology company posted adjusted EBITDA of $16.9 million.

Fiber optic cable

Image source: Getty Images.

"The second quarter was another strong quarter, with revenue up 26% compared to last year and continued gross margin expansion to 32.5%," CEO Tim Jenks said in a statement. "This was our fourth straight quarter of profitability."

Now what

In terms of guidance, revenue in the third quarter is forecast in the range of $97 million to $105 million, the midpoint of which is above the consensus estimate of $98.2 million. Adjusted gross margin is expected to be 30% to 34%, with operating expenses of $25 million to $26 million. That should all translate into adjusted earnings per share of $0.03 to $0.13, the midpoint of which is below the consensus estimate of $0.11 per share.

"With increasing momentum in 400G and above product design wins across almost all of the major network equipment manufacturers globally, and with increasing momentum in 400ZR opportunities, we remain optimistic about the growth prospects for NeoPhotonics," Jenks added.

Evan Niu, CFA 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.

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

NeoPhotonics Corporation Stock Quote
NeoPhotonics Corporation
NPTN

*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
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

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.