Viavi Solutions (VIAV) just rolled out major updates to its ONE LabPro platform, with the launch of the ONE-1600ER module designed for advanced 1.6Tb optical component testing. This move addresses mounting demands from AI-driven networks and next-generation data infrastructure.

Despite a wave of innovation, including updates to its MAP-300 platform and the unveiling of new optical testing solutions, Viavi Solutions' 1-year total shareholder return sits just above break-even. This reflects modest gains amid a year of strategic product launches and ongoing industry shifts. Still, momentum seems to be building as the company leans into infrastructure upgrades that could shape its longer-term performance.

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With Viavi Solutions posting steady one-year gains and rolling out advanced products, the key question for investors is whether the recent uptick signals untapped value or if the market is already factoring in future growth.

Most Popular Narrative: 9.1% Undervalued

Viavi Solutions’ last close price trails the fair value set by the most widely followed narrative, suggesting upside from current levels. The narrative builds its bullish outlook on major shifts in demand, led by industry upgrades and diversification beyond legacy markets.

Viavi is experiencing robust and sustained demand across the data center ecosystem, with customers updating optical connectivity to 400G, 800G, and now 1.6T. This enables multi-year upgrade cycles and expands its total addressable market, which should drive structural revenue growth through 2026 and beyond. The rapid proliferation of fiber broadband deployments for both hyperscale data interconnect and traditional carrier networks, coupled with aggressive announced spending by North American fiber operators, points to a significant near-term acceleration in fiber-related test equipment orders supporting higher future revenues.

Curious what’s pushing valuation expectations higher? The biggest swing factors in this narrative depend on breakthrough profit margins and bold revenue growth, plus one key valuation multiple that hints at further upside. See which numbers drive these outlooks and why consensus thinks the runway could be longer than the market currently reflects.

Result: Fair Value of $14 (UNDERVALUED)

However, persistent weakness in Viavi’s wireless segment or delays in key customer spending could quickly challenge current bullish forecasts.

Another View: A Look at Earnings Ratios

While the narrative points to Viavi Solutions being undervalued, our look at the company's earnings ratio paints a different picture. Viavi is trading at 81.4x earnings compared to 28.4x for peers and a fair ratio of 52.2x. This premium suggests the market may be expecting a lot from future results. Could this optimism hold, or does it leave the stock at risk if growth slows?

Build Your Own Viavi Solutions Narrative

If you see the numbers differently or want to chart your own perspective, it's easy to assemble your own take in just a few minutes with our Do it your way.

A great starting point for your Viavi Solutions research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.