Post-Earnings Analysis: Tech in Focus
FN — Reported very strongly on Monday and continues to signal strength for my fiber thesis. The most curious thing is how little pin action is occurring off of these strong reports. More on this below. This stock would probably be up more if not for the CEO announcing he is leaving.
Selling into the mid/high $30's here probably makes sense. I still favor other names in the space.
OCLR — Case in point, they have sold off since they reported a whopper and again, has shown no real upside pin action, though it's showing a touch of a bounce today. A possible explanation here is that there have been continuing rumors on OCLR as a target for a FNSR takeout. One would think this could/should have the stock higher, but maybe some think that OCLR has risen a lot and won't garner a big premium. My view is that the forward PSR is still just barely above 2. This is very cheap on any LT or M&A valuation perspective given the consolidation that's occurred in the space over the last few years.
I was buying some OCLR again recently into the selling. I'll look to add more in the mid $8's or lower should it go there.
AKAM — Strong report but this stock had already soared and a guide which was largely inline just isn't enough to keep this stock going. In the mid/high $50's, I'll take a gander at this one.
This is also somewhat indicative of some rotation action that's starting to emanate further in the market. Strong reports on hot stocks are seeing more flat to selling action than buying action. This is something I was harping on all the way back in Nov/Dec of last year.
NEWR — Another very good report and the stock is down moderately. Again, it was close to yearky highs. I prefer SPLK and VRNS and HDP in this space.
LITE — Back to the Fibers… LITE reported a good but not a great QTR at all. However, they talked about a strong forward outlook out past just one QTR and the shares are ripping. LITE has also been seeing product shortages and that's usually well received in Tech land.
Again, I would think this would engender a lot more pin action than we are seeing but that pin action might come in delayed reaction fashion as is popular with Algo trading the last couple years.
TWLO — The best report of last night, hands down, was TWLO's very big beat on the current quarter with a notably raised Rev. guide for both the QTR and FY outlooks. I'm a buyer on any notable weakness here. If one looks at how something like an ANET or several other IPO's traded in recent years, the first year of trading is fraught with lots of raids and rumors. I suppose the machines can mess with TWLO for another QTR or two but if they keep delivering these sorts of results this could have a very substantial move higher.
In the meantime, I think a range trade of 4-6pts will occur a good number of times. And guess what, we just saw a 6pt move off the recent early year lows. A break above $32.50 will break that range and setup the next higher leg.
Disclosure: Position in OCLR, SPLK, VMS, HDP, TWLO