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Acacia Communications Raises Q3 Outlook Again; Stock Up

NOK YRD COTV ACIA

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Shares of Acacia Communications (ACIA - Free Report) surged 11.3% to close at $113.54 on Oct 5, following an increase in the company’s guidance for third-quarter 2016. Notably, since its Initial Public Offering (IPO) in May 2016, Acacia shares are up 393.7% per data available from Renaissance Capital.

Acacia raised $104 million at $23 per share though its IPO. Recently, the company commenced a follow-on stock offering of 4.5 million shares, of which 1.2 million will be sold by the company itself.

Guidance Up for the Second Time

This is the second time since its second-quarter 2016 results that Acacia has raised its third-quarter guidance. The communications component maker now expects revenues in the range of $130-$133 million, while earnings are anticipated to be in the range of 83-90 cents per share (excluding stock based compensation).

Per the Sep 26 guidance, revenues were pegged at $129 million (mid-point), while earnings were expected within the range of 72-98 cents. Acacia’s original guidance anticipated revenues in the range of $120-$128 million. Earnings on a non-GAAP basis were estimated to be 64-76 cents.

ACACIA COMMUNIC Price and Consensus

ACACIA COMMUNIC Price and Consensus | ACACIA COMMUNIC Quote

The Zacks Consensus Estimate is currently pegged at 60 cents (including stock based compensation) on revenues of $129.1 million. For the current year, earnings estimates are pegged at $2.15, which has surged almost 15% over the last 7 days.

Adoption Rate Strong for Acacia Products

The raised guidance primarily reflects growing demand for Acacia’s products. The company recently announced that more than 12 of its customers have adopted coherent solutions based on its Dual-Core Flex-Rate Denali digital signal processor (DSP) technology for applications in datacenter interconnect (DCI), metro, long haul and submarine networks.

Moreover, Acacia’s AC400 Flex optical module product family has also gained significant traction within a short span of time. The company announced that it has recently added a second contract manufacturer to address growing customer demand.

Recently, Acacia announced a new long-haul optical module solution as part of its AC100-CFP product family. The new long-haul CFP-DCO model is based on the company’s latest silicon photonics integrated circuit (PIC) and offers the enhanced performance features necessary for long-haul applications.

The faster rate of adoption will definitely boost Acacia’s customer base – which includes the likes of Alcatel Lucent, acquired by Nokia (NOK - Free Report) – in the near term.

Acacia: Most Successful IPO in the Last 12 Months

Per data available from Renaissance Capital, Acacia is the most successful IPO in terms of returns over the last 12 months. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Yirendai (YRD - Free Report) and Cotiviti Holdings (COTV - Free Report) , both sporting a Zacks Rank #1 are two stocks that have posted handsome returns of almost 159% and 89.6%, respectively over the same time frame. 

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