Acacia Communications Falls On Guidance

Acacia Communications, a global company that provides high-speed coherent interconnect products yesterday reported their fourth quarter and full year 2016 financial results. Acacia reported fourth quarter adjusted earnings of $0.94 per share which beat analyst expectations of $0.90 per share.

Acacia reported fourth quarter sales of $142.4 million which beat analyst expectations of $139.7 million. However Acacia projects the current quarter earnings to be in between $0.63 and $0.70 per share which fell short of analyst expectations of $0.78 per share. Acacia projected current quarter revenues to be in between $108 million and $114 million which fell short of analyst expectations of $137.3 million.

Our solid fourth quarter results were driven by continued strong global demand for our 100G and flex-400G products from the metro and DCI markets and the ramp of our newer customers, and we are very pleased to report that we added a hyper-scale cloud and content provider, who is a direct customer deploying our AC400 product, as a significant customer in the fourth quarter,” said Raj Shanmugaraj, President and Chief Executive Officer of Acacia Communications. “We are committed to our mission of delivering high-speed optical interconnects that transform cloud, content and communication networks. We are already seeing good traction with our latest “industry first” product, the CFP2-DCO module, and we believe that our current product offerings, roadmap products, and development pipeline, position us well to take advantage of future growth opportunities.

Our fourth quarter results again exceeded our guidance for revenue and non-GAAP diluted EPS* and capped off a strong year at Acacia Communications. During the fourth quarter, we experienced year-over-year revenue growth of 108%, further diversified our revenue base, with sales to newer customers outside our original eight 2011 customers increasing to 35% of our total revenue from 14% in the first quarter of 2016,” said John Gavin, Chief Financial Officer of Acacia Communications. “We believe our market strategy and business model are strong, and position us for further growth. Globe Newswire

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ACIA opened trading yesterday at $63.98 which was up from the previous day’s trading close of $62.22. Shares closed trading yesterday at $63.43 and spiked down after market to $53.90, equivalent to a 15% decrease from the closing price. Taking a look at the daily chart we can see that the last time ACIA traded below these levels we have to go all the way back to July 14th, 2016 when it traded at $52.43.

Taking a closer look at the daily chart we can see that before the spike down ACIA had already been in an overall downward trend dating back to September 6th, 2016 when it traded at $123.44. ACIA has a float of 14.32 million shares and traded 2.45 times the normal daily trading volume on Thursday. For trading purposes, I would like to see ACIA open trading on Friday below $57.00 and if it does I would be looking to take a short position at the bell. My stop loss would be $0.50 from my entry position fearing anything more than that and the stock would start to fill in the gap down.

h3 Company Profile/h3

Acacia Communications, Inc. provides high-speed coherent interconnect products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific region. Its products include a series of low-power coherent digital signal processors and silicon photonic integrated circuits integrated into families of optical interconnect modules with transmission speeds ranging from 40 to 400 gigabits per second for use in long-haul, metro, and inter-data center markets. The company sells its products through a direct sales force to network equipment manufacturers. Acacia Communications, Inc. was founded in 2009 and is headquartered in Maynard, Massachusetts.

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Written By: Warrior Trading