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Viavi Solutions (VIAV)
NASDAQ:VIAV
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Viavi Solutions
(NASDAQ:VIAV)60Neutral
Positive Factors
Acquisition
Viavi comes out victorious in competitive bidding process.
Market Recovery
Evidence of the NA Service Provider recovery is well underway, leading to an upgrade of VIAV stock to Buy.
Negative Factors
Growth Prospects
Profitability is more driven by OSP, where growth prospects are limited.
Viavi Solutions (VIAV) vs. S&P 500 (SPY)
Market Cap
$2.43B
Dividend YieldN/A
Average Volume (3M)2.78M
Price to Earnings (P/E)―
Beta (1Y)1.31
Revenue Growth-0.67%
EPS Growth-856.71%
CountryUS
Employees3,600
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)-0.17
Shares Outstanding222,137,470
10 Day Avg. Volume2,047,370
30 Day Avg. Volume2,782,516
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.41
Price to Cash Flow (P/CF)13.60
P/FCF Ratio12.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$13.07Price Target Upside19.47% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Viavi Solutions Business Overview & Revenue Model
Company DescriptionViavi Solutions Inc. (VIAV) is a global provider of network test, monitoring, and assurance solutions to communications service providers, enterprises, and network equipment manufacturers. The company operates primarily in two segments: Network Enablement and Optical Security and Performance Products. Viavi's product portfolio includes solutions for network testing, service assurance, and optimization, which are critical for the deployment and maintenance of telecommunications networks, including 5G, fiber optics, and data centers. Additionally, Viavi provides anti-counterfeiting technologies for currency authentication and other security solutions.
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
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.45
Neutral
Balance Sheet
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.60
Neutral
Cash Flow
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.70
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Jun 2020 |
|---|---|---|---|---|---|
| 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 | ||||
| 509.40M | 491.20M | 521.10M | 561.30M | 699.40M | 540.50M | Total Assets |
| 1.73B | 1.74B | 1.85B | 1.83B | 1.96B | 1.78B | Total Debt |
| 639.30M | 687.20M | 725.70M | 684.90M | 669.80M | 603.70M | Net Debt |
| 151.30M | 215.90M | 219.20M | 125.00M | -28.00M | 64.70M | Total Liabilities |
| 1.04B | 1.05B | 1.16B | 1.16B | 1.19B | 1.06B | Stockholders Equity |
| 682.80M | 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
Neutral
10.94
Price Trends
10.99
Negative
10.47
Positive
9.17
Positive
Market Momentum
-0.08
Positive
43.10
Neutral
27.63
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VIAV, the sentiment is Neutral. The current price of 10.94 is below the 20-day moving average (MA) of 11.65, below the 50-day MA of 10.99, and above the 200-day MA of 9.17, indicating a neutral trend. The MACD of -0.08 indicates Positive momentum. The RSI at 43.10 is Neutral, neither overbought nor oversold. The STOCH value of 27.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $6.98B | 21.69 | 18.88% | ― | 14.83% | 28.84% | |
60 Neutral | $2.43B | ― | -5.53% | ― | -0.67% | -856.71% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
53 Neutral | $10.31B | ― | 0.88% | ― | 14.61% | 85.44% | |
47 Neutral | $4.30B | ― | -48.63% | ― | -1.72% | -94.98% |
* Technology Sector Average
Performance Comparison
VIAV
Viavi Solutions
10.94
0.26
2.43%
FN
Fabrinet
193.83
-7.96
-3.94%
COHR
Coherent Corp
66.54
5.05
8.21%
LITE
Lumentum Holdings
62.11
15.24
32.52%
Viavi Solutions Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: 9.51% | 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.
M&A TransactionsBusiness Operations and Strategy
Viavi Solutions to Acquire Inertial Labs for Expansion
Positive
Dec 13, 2024
Viavi Solutions Inc. has announced a definitive agreement to acquire Inertial Labs, Inc. for an initial consideration of $150 million, with potential additional payments up to $175 million over four years. This strategic acquisition expands VIAVI’s reach into aerospace, defense, and industrial markets, broadening its product portfolio with complementary offerings and accelerating its entry into high-growth applications such as autonomous systems. The deal, expected to add approximately $50 million to annual revenue and be accretive to earnings within a year, is set to close in the first quarter of 2025, pending regulatory approvals.
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.