UPDATE: Morgan Stanley Reiterates Finisar at Overweight on Surging Datacom

In a report published on Thursday, Morgan Stanley analyst Ehud Gelblum reiterated Finisar (NASDAQ: FNSR) at Overweight and maintained an $18 price target.

In the report, Morgan Stanley commented, "The higher-margin Datacom business drove revenue (and GM), up 11% q/q to 67% of rev from 62% in FQ3. Upside came from 10GigE transceivers for switch/server attach and 16G FC, along with 100G CFP for routers. A surprising 12% q/q decline in Telecom revenue, however, wiped out the datacom upside, missing flat-to-down guidance, and we believe potentially reflecting some weakness at customer ALU, and since the next build cycle has yet to begin. WSS & ROADM line cards were flat q/q, while Tunable-XFPs fell ~10% q/q, reversing what was strong 30% q/q growth in FQ3."

Finisar Closed on Wednesday at $14.52.