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Viavi (VIAV) Boosts Production Capacity With New AZ Facility

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Viavi Solutions Inc. (VIAV - Free Report) recently expanded its production capacity in the United States by opening a new production facility in Chandler, AZ. In addition to generating jobs to boost regional economic development, the investment is likely to help meet the increasing demand for high-speed connectivity via large-scale production of low-cost optical fibers.

The facility will feature state-of-the-art optical coating capabilities with sophisticated equipment and is likely to provide the ideal conditions for long-term, sustainable growth with a business-friendly environment and a strong talent pool. The facility is expected to further complement the strategic plan of the company to relocate its headquarters to Chandler from California and leverage the city’s high quality of life at a reasonable cost.

Viavi engages in targeted restructuring activities to consolidate its operations and align businesses with evolving market conditions and investment strategies. The company pursues a holistic growth model with strategic acquisitions and focused organic improvement plans. Of late, the OSP (Optical Security and Performance Products) segment has been benefiting from strong demand for 3D sensing and anti-counterfeiting products. The company expects to leverage major secular growth trends in 5G wireless, fiber and 3D sensing to achieve higher revenues and profitability with greater flexibility in the capital structure.

Viavi boasts a comprehensive product portfolio that offers end-to-end network visibility and analytics that help build, test, certify, maintain and optimize complex physical and virtual networks. The company’s wireless and fiber test solutions are in the early stages of a multi-year investment cycle, fueled by the transition of OEMs and service providers to superfast 5G networks. The healthy growth traction is further demonstrated by the upside in wireless & fiber test, 3D sensing products, optical transport, Ethernet, broadband access, video test and storage network testing markets.

The 5G transition is expected to be disruptive in nature, potentially creating new avenues for industries across the board. 5G is likely to augment the telecommunications industry's scalability, security and universal mobility, thus propelling the proliferation of IoT. Telecom firms are enabling customers to move away from an economy-of-scale network operating model to demand-driven operations. They are ensuring seamless migration to 5G by offering easy programmability and flexible automation. The convergence of network technologies requires significant investments from both traditional carriers (telecom and cable) and cloud service providers. Viavi’s solutions are well-positioned to meet these rapidly changing industry trends, given its technology prowess, product depth and wide customer base.

Demand for sophisticated anti-counterfeiting features, which consumers can easily validate without using special tools but are difficult to create or simulate using conventional printing technology, has led to the exponential growth of Viavi’s OSP segment. The custom optics products of the company offer an array of advanced technologies and precision optics to meet customers' specific requirements. Its 3D sensing optical filters and Engineered Diffusers are deployed in smartphones for facial recognition biometric authentication. In addition, optical filters and sensors deployed in autonomous vehicles and IoT devices offer lucrative opportunities for the company.

The stock has lost 30.1% in the past year compared with the industry’s decline of 13.5%.

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Viavi currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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