Viavi Solutions (VIAV) AI Stock Analysis

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Viavi Solutions

(NASDAQ:VIAV)

61Neutral

Viavi Solutions shows a mixed financial performance with declining revenues but stable cash flow, which gives some resilience. The recent earnings call showed strong performance in certain segments, while the acquisition of Spirent’s Ethernet Business provides a positive strategic outlook. However, the valuation metrics suggest caution due to negative earnings. Overall, the stock presents moderate opportunities with some significant risks.

Positive Factors

Acquisition

Viavi comes out victorious in competitive bidding process.

Growth Prospects

Encouraged by the acquisition, as it represents a growth area for Viavi.

Negative Factors

EPS Limitations

Despite the positive developments, earnings per share (EPS) follow-through is limited in the near term due to lower interest income.

Valuation Concerns

The valuation is considered full at 23x next twelve months price-to-earnings ratio, which impacts the analyst's recommendation to remain underweight on the stock.

Viavi Solutions (VIAV) vs. S&P 500 (SPY)

Market Cap

$2.19B

Dividend YieldN/A

Average Volume (3M)2.04M

Price to Earnings (P/E)―

Beta (1Y)1.24

Revenue Growth-0.67%

EPS Growth-856.71%

CountryUS

Employees3,600

SectorTechnology

Sector Strength51

IndustryCommunication Equipment

Share Statistics

EPS (TTM)-0.17

Shares Outstanding222,137,470

10 Day Avg. Volume2,179,951

30 Day Avg. Volume2,038,725

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.56

Price to Cash Flow (P/CF)14.40

P/FCF Ratio13.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$12.79

Price Target Upside29.58% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Viavi Solutions Business Overview & Revenue Model

Company DescriptionViavi Solutions Inc. provides network test, monitoring, and assurance solutions to communications service providers, enterprises, network equipment manufacturers, original equipment manufacturers, government, and avionics customers worldwide. The company operates through three segments: Network Enablement (NE), Service Enablement (SE), and Optical Security and Performance Products (OSP) segments. The NE segment offers testing solutions that access the network to perform build-out and maintenance tasks. This segment provides solutions that include instruments, software, and services to design, build, activate, certify, troubleshoot, and optimize networks; and instrumentation for communication and safety. It also offers support and professional services, such as repair, calibration, software support, and technical assistance for the products; and system integration projects, including project management, installation, and implementation, as well as product and technology training, and consulting services. The SE segment provides embedded systems and enterprise performance management solutions for communication service providers, enterprises, and cloud operators with visibility into network, service, and application data. Its solutions include instruments, microprobes, and software, which monitor, collect, and analyze network data to reveal the actual customer experience and to identify opportunities for new revenue streams and network optimization. The OSP segment offers optical products for anti-counterfeiting, consumer and industrial, government, automotive, and industrial markets. The company was formerly known as JDS Uniphase Corporation and changed its name to Viavi Solutions Inc. in August 2015. Viavi Solutions Inc. was founded in 1923 and is headquartered in Scottsdale, Arizona.

How the Company Makes MoneyViavi Solutions generates revenue through the sale of its network testing and monitoring products and services, which are essential for the deployment and maintenance of telecommunications infrastructures such as 5G networks and data centers. The company's Network Enablement segment contributes to revenue by providing testing and assurance solutions that help service providers and equipment manufacturers ensure network performance and reliability. Additionally, Viavi's Optical Security and Performance Products segment generates income through the sale of optical security solutions used in currency authentication and brand protection. Viavi also benefits from long-term contracts and partnerships with leading telecommunications companies and government agencies, which provide a steady stream of revenue through ongoing service and maintenance agreements.

Viavi Solutions Financial Statement Overview

Summary

Viavi Solutions faces challenges with declining revenues and profitability, impacting its income statement negatively. The balance sheet shows moderate leverage, but recent losses affect equity returns. Cash flow stability provides some resilience, but efficiency improvements are needed to bolster financial health.

Income Statement

Neutral

Viavi Solutions shows a decline in revenue from $1,292 million in 2022 to $1,007 million in TTM, indicating a negative revenue growth trend. The net profit margin is negative in the TTM, reflecting losses. Both EBIT and EBITDA margins have weakened, suggesting lower operational efficiency and profitability.

Balance Sheet

Neutral

The company maintains a moderate debt-to-equity ratio, reflecting balanced leverage. However, the equity ratio has slightly declined, indicating less reliance on equity financing. Return on equity is currently negative due to losses, highlighting potential risk in shareholder returns.

Cash Flow

Positive

Viavi Solutions has a stable operating cash flow, although free cash flow has decreased in the TTM. The operating cash flow to net income ratio is positive, yet the free cash flow to net income ratio is lower, indicating cash flow management challenges despite adequate operational cash generation.

TTM	Jun 2024	Sep 2023	Sep 2022	Sep 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
1.01B	1.00B	1.11B	1.29B	1.20B	1.14B
	Gross Profit
577.60M	575.90M	638.80M	773.50M	714.40M	665.30M
	EBIT
30.00M	20.80M	82.40M	185.00M	142.20M	118.10M
	EBITDA
87.30M	101.20M	154.10M	260.60M	237.40M	199.80M
	Net Income Common Stockholders
-39.00M	-25.80M	25.50M	15.50M	46.10M	28.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
585.90M	491.20M	521.10M	561.30M	699.40M	540.50M
	Total Assets
1.76B	1.74B	1.85B	1.83B	1.96B	1.78B
	Total Debt
271.60M	687.20M	725.70M	684.90M	669.80M	603.70M
	Net Debt
-98.70M	215.90M	219.20M	125.00M	-28.00M	64.70M
	Total Liabilities
832.60M	1.05B	1.16B	1.16B	1.19B	1.06B
	Stockholders Equity
922.70M	681.60M	690.80M	671.70M	774.80M	711.40M
Cash Flow		Free Cash Flow
81.40M	96.90M	63.00M	105.60M	191.20M	103.70M
	Operating Cash Flow
103.90M	116.40M	114.10M	178.10M	243.30M	135.60M
	Investing Cash Flow
-17.10M	-21.60M	-127.10M	-71.00M	-48.70M	-29.80M
	Financing Cash Flow
-129.30M	-125.70M	-50.00M	-210.40M	-58.80M	-71.70M

Viavi Solutions Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.87

Price Trends

50DMA

11.35

Negative

100DMA

10.79

Negative

200DMA

9.60

Positive

Market Momentum

MACD

0.03

Negative

RSI

47.74

Neutral

STOCH

21.86

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VIAV, the sentiment is Negative. The current price of 9.87 is below the 20-day moving average (MA) of 10.89, below the 50-day MA of 11.35, and above the 200-day MA of 9.60, indicating a neutral trend. The MACD of 0.03 indicates Negative momentum. The RSI at 47.74 is Neutral, neither overbought nor oversold. The STOCH value of 21.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VIAV.

Viavi Solutions Risk Analysis

Viavi Solutions disclosed 31 risk factors in its most recent earnings report. Viavi Solutions reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Viavi Solutions Peers Comparison

Overall Rating

UnderperformOutperform

Sector (57)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VICR	65 Neutral	$2.12B	359.95	1.10%	―	-14.92%	-91.72%
PI	65 Neutral	$1.91B	50.88	44.39%	―	19.04%	―
TTMI	61 Neutral	$1.90B	34.44	3.66%	―	9.41%	―
VIAV	61 Neutral	$2.19B	―	-5.53%	―	-0.67%	-856.71%
POWI	58 Neutral	$2.56B	79.92	4.29%	1.82%	-5.75%	-41.75%
Sector *	57 Neutral	$19.95B	9.66	-12.05%	2.76%	5.40%	-24.89%
VSH	40 Neutral	$1.55B	26.74	-1.47%	3.58%	-13.65%	-110.03%

* Technology Sector Average

Performance Comparison

VIAV

Viavi Solutions

9.87

1.55

18.63%

POWI

Power Integrations

45.09

-21.26

-32.04%

TTMI

TTM Technologies

18.65

4.38

30.69%

VICR

Vicor

46.83

11.52

32.63%

VSH

Vishay Intertechnology

11.16

-9.81

-46.78%

IMPINJ

66.77

-51.73

-43.65%

Viavi Solutions Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: -1.20% | Next Earnings Date: May 6, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance, with several metrics exceeding guidance. Notable growth in the NSE segment, fiber lab, and aerospace and defense sectors provided positive momentum. However, challenges persist in the SE and OSP segments, with revenue declines and margin pressures. Overall, the positive aspects outweigh the negatives, reflecting a strong recovery and strategic growth initiatives.

Highlights

Exceeded Revenue and Earnings Guidance

Net revenue for the quarter was $270.8 million, above the guidance range of $255 million to $265 million. EPS at $0.13 was above the guidance range of $0.09 to $0.11.

Strong Performance in NSE Segment

NSE revenue was $199.9 million, at the high end of the guidance range, with a year-over-year increase of 11.3%. Operating margin increased by 510 basis points year-over-year.

Significant Growth in Fiber Lab and Production

Fiber lab and production demand was up significantly, driven by growth in lab fiber and optical transport, and shipment of the first 1.6 terabit fiber product.

Aerospace and Defense Business Growth

Continued robust year-on-year growth in the aerospace and defense business segment, driven by mission-critical products.

Positive Cash Flow from Operations

Cash flow from operating activities was $44.7 million, more than double the $20.4 million from the same period last year.

Lowlights

Decline in SE Revenue

SE revenue was $20.9 million, down 13.3% year-over-year, primarily due to decreased spending from enterprise customers.

Weakness in OSP Segment

OSP revenue was $70.9 million, slightly below the low end of the guidance range, with a year-over-year decline of 5.3% due to weaker demand for 3D sensing products.

Lower Gross Margins in OSP

OSP gross margin was 50.6%, down 150 basis points from the same period last year, driven by lower volume and unfavorable product mix.

Company Guidance

During VIAVI Solutions' fiscal second quarter 2025 earnings call, the company reported net revenue of $270.8 million, exceeding the guidance range of $255 million to $265 million. This figure represented a 13.7% sequential increase and a 6.4% year-over-year rise. The operating margin also surpassed expectations, reaching 14.9%, compared to the guidance range of 11.4% to 13.4%. Earnings per share (EPS) was recorded at $0.13, above the anticipated range of $0.09 to $0.11. In the Network and Service Enablement (NSE) segment, revenue reached $199.9 million, aligning with the high end of the guidance range, driven by strong demand from service providers and network equipment manufacturers. Meanwhile, Optical Security and Performance Products (OSP) revenue slightly missed the low end of guidance at $70.9 million. Looking ahead to the third fiscal quarter, VIAVI anticipates revenue between $276 million and $288 million, with an operating margin around 14% and EPS ranging from $0.10 to $0.13. The company expects NSE revenue of approximately $207 million and OSP revenue of about $75 million, with continued focus on market recovery and strategic growth initiatives.

Viavi Solutions Corporate Events

M&A TransactionsBusiness Operations and Strategy

Viavi Solutions to Acquire Spirent’s Ethernet Business

Positive

Mar 3, 2025

On March 3, 2025, VIAVI Solutions announced its agreement to acquire Spirent Communications plc’s High-Speed Ethernet and Network Security Business from Keysight Technologies for $410 million, with an additional contingent cash consideration of $15 million. This acquisition, expected to close in the second quarter of 2025, aims to enhance VIAVI’s product portfolio in ethernet, security, AI, and digital infrastructure markets, potentially adding $180 million to its NSE revenue in the first year and being accretive to EPS.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.