Why Viavi Solutions (VIAV) Is Back on Investor Radar

Viavi Solutions (VIAV) has just rolled out two new testing products, including an AR based RF Viewer built with Verizon Wireless and an all in one hollow core fiber certification solution, drawing fresh attention to the stock.

The new AR based RF Viewer and hollow core fiber testing launch come after a strong 90 day share price return of 38.74%, while the 1 year total shareholder return of 78.89% points to building momentum despite earlier setbacks.

If Viavi’s recent product rollouts have caught your attention, it could be a good moment to scan the wider field of high growth tech and AI stocks for other potential ideas.

With Viavi trading at $18.05 against an analyst price target of $19.00, a value score of 1 and an elevated P/E relative to peers, you have to ask: is there still a buying opportunity here, or is future growth already priced in?

Most Popular Narrative: 5% Undervalued

With Viavi closing at $18.05 against a widely followed fair value estimate of $19.00, the narrative suggests a modest upside still on the table.

The analysts have a consensus price target of $14.0 for Viavi Solutions based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $16.0, and the most bearish reporting a price target of just $12.0.

Curious how a higher fair value emerges from modest revenue assumptions, rising margins, and a future P/E cut nearly in half? The full narrative lays out the math behind that tension.

Result: Fair Value of $19 (UNDERVALUED)

However, there is still real execution risk if wireless test demand stays weak or if the Spirent and Inertial Labs acquisitions fail to deliver the expected margin benefits.

Another View: Multiples Paint a Tougher Picture

The 5% undervalued fair value story sits awkwardly beside how the market is actually pricing Viavi today. On a P/S of 3.5x versus 2.0x for the US Communications industry and 2.2x for peers, Viavi looks expensive, even if the fair ratio of 5.1x suggests the market could eventually move higher. Is that a margin of safety you are comfortable with, or is it asking you to pay up for a lot to go right?

Build Your Own Viavi Solutions Narrative

If you feel the story looks different when you study the numbers yourself, you can reshape it 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 2 important warning signs that could impact your investment decision.

Ready for more stock ideas worth your time?

If Viavi has sharpened your focus, do not stop here. Cast a wider net with curated stock ideas that fit different angles of your portfolio.

• Target high potential small caps that still pass basic quality checks by scanning these 3536 penny stocks with strong financials and seeing which ones earn a closer look.
• Zero in on companies tied to AI trends by running through these 25 AI penny stocks and spotting businesses that line up with your view of where data and automation are heading.
• Hunt for possible mispricing by filtering for these 883 undervalued stocks based on cash flows and seeing which names the market might not be fully appreciating yet.

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.