Infinera’s Market Share Growth and Margin Expansion Justify Buy Rating

Needham analyst Ryan Koontz maintained a Buy rating on Infinera (INFN – Research Report) today and set a price target of $10.00.

Ryan Koontz has given his Buy rating due to a combination of factors including Infinera’s return to optical innovation leadership and its potential to leverage this position in a modestly growing market. Koontz recognizes Infinera’s transition to leveraging in-house developed 800G DSP technology as a strategic move that is expected to significantly improve gross margins and drive strong operating leverage. Additionally, he sees the company’s ability to replace Huawei in Europe, secure new wins in Sub-Sea and Tier 1 service providers, and engage with hyperscale data center interconnect pluggable technologies as key opportunities for market share gains.

The analyst also points out Infinera’s promising pipeline, which is bolstered by the commitment of “hundreds of millions” from new hyperscale data center interconnect pluggable agreements. Infinera’s in-house DSP technology is also anticipated to be a game-changer within data center operations, potentially transforming the market in the medium to long term. Despite the total addressable market (TAM) growing at a mid-single-digit rate, Koontz is optimistic about Infinera’s prospects for steady market share capture and operating margin expansion, which underpins the rationale behind the Buy rating.

Koontz covers the Technology sector, focusing on stocks such as Harmonic, Lantronix, and 8X8. According to TipRanks, Koontz has an average return of -11.3% and a 32.14% success rate on recommended stocks.

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Infinera (INFN) Company Description:

Infinera Corp. engages in the provision of optical transport networking equipment, software, and services to telecommunications carriers. Its products include long-haul and subsea, metro networks, data center interconnect, and software. The company was founded by David F. Welch, Drew Daniel Perkins, and Jagdeep Singh in December 2000, and is headquartered in Sunnyvale, CA.