UPDATE: RBC Capital Upgrades Finisar

Shares of Finisar (NASDAQ: FNSR) have jumped 4.8 percent to $26.78 in Friday's trading after RBC Capital upgraded shares from Sector Perform to Outperform and raised the price target from $26 to $30.

Finisar's fixed-cost model, which “subsequently turns into variable input costs and healthy contribution margins,” may allow the stock to outperform its peers, Ameet Prabhu, analyst at RBC said.

Prabhu said the company is “benefiting from a 40G upgrade in datacom and healthy demand for 100G in telecom.”

The analysts “CY15 EPS is $2.05, up from $1.92” as “some part of Cisco's business may be replaced by other switch vendors as well as by web 2.0 customers.”

During the last cycle in 2010, the company “achieved peak operating margins of 17%, showing there's still room for improvement from current expected levels of 13.4%,” said Prabhu.