Rosenblatt downgrades Viavi on ‘growing worry’ over telecom spending

Rosenblatt downgraded Viavi Solutions to Neutral from Buy with an $8.25 price target. The firm cites its “growing worry” that the telecom spending weakness of the last two years is more structural than cyclical for the downgrade. Viavi derives over 50% of revenue from telecom end markets, and is particularly exposed to optical, wireless and access spending, the analyst tells investors in a research note. The firm sees “some slight positive catalysts” over the next few quarters related to access, such as cable upgrades and the BEAD program, but its view of the second half of 2024 and 2025 optical and 5G spending “remains very cautious.” The secondary reason for our downgrade is that Viavi has been unable to make key strategic acquisitions because it has been outbid by competitors, mostly recently by Keysight for Spirent, Rosenblatt adds.