What's happening: Shares of optical networking specialist Infinera (NASDAQ:INFN) soared as much as 13% in the early Thursday market session. The stock set fresh all-time highs in the process, dating all the way back to October of 2007.
Why it's happening: Catalyzing this surge, Infinera reported strong second-quarter earnings and optimistic guidance right after Wednesday's closing bell. In the second quarter, Infinera's sales rose 25% year-over-year to land at $207.3 million. Analysts were expecting just $201.3 million, or a 22% annual boost.
On the bottom line, adjusted earnings rose 64% to $0.18 per diluted share. Here, the Street would have settled for $0.16 per share.
For the next quarter, analysts had been projecting earnings of $0.16 per share on roughly $206 million in total sales. Infinera's guidance for that period came in significantly stronger. The midpoints of the guidance ranges centered on $0.17 per share and $215 million, respectively.
Infinera's strong quarter could be a harbinger of strength across the long-haul networking markets. Here's how Infinera CEO Tom Fallon explained his company's surprising performance:
"Our outstanding second quarter results were driven by robust demand across multiple verticals, as customers continued to build next generation networks with Infinera," Fallon said in a press statement. "With the emergence of new cloud architectures, the strategic importance of optical transport has never been higher."
Fallon also noted that Infinera owns many selling points compared to optical infrastructure rivals, of course. And it's entirely possible that the company simply out-executed the field in another low-demand quarter. But the report could also signal the starting shot for the next big wave of long-haul network upgrades, similar to the broadband overhauls and 4G wireless networking installations of yesteryear.
5G wireless networks are just around the bend, and the telecoms will need plenty of fiber-based backhaul capacity in order to make it happen. Moreover, consumers and businesses alike are itching to take their network connections to the next level at gigabit speeds and above. Infinera's rosy market recap fits like a glove on these underlying macro trends.