Deutsche Bank says that despite tight lips from Finisar (NASDAQ:FNSR) mgt, their checks indicate that Finisar has received approval for 10 Gig transceiver (X2 SR) shipments to Cisco on major platforms including Catalyst 3000, Cat 4000 and flagship Cat 6000. Certification on Cisco's major product lines for the X2 form factor is a key milestone and is core to firm's thesis on Finisar shares.
While late on certification, firm still expects Finisar to be the major supplier of X2 (10 GigE) transceivers into Cisco: 1. Cisco has mandated two laser sources of which Finisar is one 2. Finisar has the "home court advantage" as global transceiver leader 3. Firm's contacts maintain this to be the case.
Firm expects Finisar to report Q4 2007 (Apr) in early June. Although early, they expect results slightly above the midpoint of management's $104M to $110M guidance, or inline with their $108M estimate (street $108M). Their July quarter estimates move from $114M and $0.04 to $117M and $0.05 largely on better visibility into the 10 Gig ramp at Cisco. They had probability weighted certification at Cisco at 50% in the July quarter and now believe that this hurdle is behind the company.
Firm has Buy rating with $5 tgt for the stock.
Notablecalls: While the stock has made a move already, Cisco win should sound appealing enough to create additional buying interest.