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Analyst Blog

On May 28, 2014, we issued an updated research report on JDS Uniphase Corp. (JDSU - Analyst Report).

JDS Uniphase has delivered three positive earnings surprises in the last year, with an average beat of 23.61%. The company reported mixed financial results for the third quarter of fiscal 2014, wherein the bottom line outpaced the Zacks Consensus Estimate but the top line fell below the same. However, management provided a tepid outlook for the ensuing fourth quarter of fiscal 2014.

We believe that the Communications Test and Measurement division of JDS Uniphase will be immensely benefited from the massive growth of wireless backhaul and DOCSIS 3.0 networks deployment. As wireless carriers are gradually increasing their backhaul capacity due to significant growth of mobile Internet traffic and multimedia applications, cable operators are rapidly deploying DOCSIS 3.0 networks to stay competitive by providing faster data access speeds.

Recently, the board of directors of JDS Uniphase has approved a share repurchase program of up to $100 million through open market or private transactions. Such a move will help the company boost its shareholders' wealth. Moreover, acquisition of Network Instruments and Trendium, a real-time intelligence software solutions supplier for customer experience assurance (CEA), will  fortify its market position.

However, on the downside, the ongoing global economic fluctuations may significantly affect the prospects of JDS Uniphase. Moreover, the consolidation trend of wireless networks and data centers will worsen the situation. Meanwhile, the stock price is fairly valued at current levels and is trading at the high end of a 52-week high.

JDS Uniphase currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Other better-ranked stocks that belong to the sector include ShoreTel, Inc. (SHOR - Snapshot Report), Harmonic Inc. (HLIT - Snapshot Report) and Premiere Global Services, Inc. (PGI - Snapshot Report). Currently, ShoreTel has a Zacks Rank #1 (Strong Buy) while Harmonic and Premiere Global Services have a Zacks Rank #2 (Buy).

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