Viavi Solutions (VIAV) just gave investors plenty to think about. The company delivered fourth-quarter results that came in above expectations, highlighted by solid revenue growth and an earnings beat. Just as the market was digesting those upbeat numbers, Viavi also revealed a strategic partnership with CrowdStrike aimed at sharpening visibility across security and IT operations, a move that could expand Viavi's reach into cybersecurity workflows. With the company further strengthening its financial position by issuing $250 million in convertible notes, it is clear that management is intent on fueling future growth. Naturally, these headlines pushed the stock into focus. Viavi has climbed 45% over the past year, handily outpacing many of its peers. Shorter-term momentum is also building, with gains of 30% in the past three months and nearly 12% over the last month, signaling that investors are responding to a combination of operational progress and strategic moves. These recent developments follow a period when the company’s three-year return was still in the red, suggesting that the tide may be turning after a stretch of underperformance. So after this year’s strong run and recent surge in optimism, is Viavi now a bargain, or has the market already priced in much of its future growth story?

Most Popular Narrative: 14.1% Undervalued

According to the most widely followed narrative, Viavi Solutions is considered undervalued by 14.1% based on a consensus fair value of $14.00. This view is grounded in bullish analyst assumptions about the company’s future earnings growth and margin expansion, with a discount rate applied that reflects sector benchmarks.

“Viavi is experiencing robust and sustained demand across the data center ecosystem, with customers updating optical connectivity to 400G, 800G, and now 1.6T, enabling multi-year upgrade cycles and expanding its total addressable market, which should drive structural revenue growth through 2026 and beyond.”

Ready to see what’s driving this rosy valuation? The secret sauce is a bold set of financial projections, including surging profits, margin improvements, and a multiple that attracts Wall Street’s attention. Curious about how ambitious growth assumptions, margin forecasts, and analyst confidence contribute to that enticing fair value? Continue reading to discover which future targets support this narrative and why it’s gaining attention.

Result: Fair Value of $14.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in wireless infrastructure and unpredictable service provider spending could quickly challenge the positive narrative that is driving current optimism.

Find out about the key risks to this Viavi Solutions narrative.

Another View: What Do Market Valuations Say?

Taking a different approach, our market-based valuation looks at how the company trades relative to others in its industry. This method currently suggests the shares could be trading at a higher price than justified. Which perspective will ultimately prove more accurate?

Stay updated when valuation signals shift by adding Viavi Solutions to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Viavi Solutions Narrative

If the prevailing views do not match your own outlook, or you want to dig deeper into the details, you can easily craft your own story using the data in just a few minutes. 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.

Ready for More Investment Ideas?

Don’t miss your next opportunity. Simply Wall Street’s Screeners can help you spot unique stocks and market trends you might otherwise overlook. Take the next step and find a fresh perspective on your portfolio.

• Supercharge your portfolio with companies at the forefront of artificial intelligence and emerging technology using the insights from AI penny stocks.
• Accelerate your search for growth by evaluating stocks trading below intrinsic value with our easy-to-use undervalued stocks based on cash flows.
• Amplify your passive income with stocks that consistently deliver strong yields through the focused results from dividend stocks with yields > 3%.

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.