Please ensure Javascript is enabled for purposes of website accessibility

Why Finisar Shares Flew

By Brian D. Pacampara, CFA - Apr 4, 2013 at 3:02PM

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

Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of optical component vendor Finisar (FNSR) popped 10% today after Wall Street firm Lazard upgraded the stock from "neutral" to "buy."

So what: Along with the upgrade, Lazard planted a $17 price target on the stock, representing 35% worth of upside to yesterday's close. The stock has been beaten down over the past few months on competitive concerns and a weak earnings report, but Lazard thinks the risk/reward trade-off at this point is too tasty to pass up.

Now what: Fools know to take Wall Street opinions with a grain of salt, but the stock seems worth looking into. While the steadily growing adoption of Intel's silicon photonics solution is certainly cause for concern, Finisar's rock-solid balance sheet of roughly $225 million in net cash should give management some flexibility in dealing with the threat. More importantly, with the stock still off about 30% from its 52-week highs and trading at a forward P/E of 14, the downside already seems limited.

Interested in more info Finisar? Add it to your watchlist.

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

Finisar Stock Quote
Finisar
FNSR
Intel Corporation Stock Quote
Intel Corporation
INTC
$36.69 (0.96%) $0.35

*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
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

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.