Analysts bullish on Acacia after huge beat in first report since IPO The shares of Acacia Communications (ACIA) are soaring after the company last night reported much stronger than expected second quarter results. Several analysts were quite impressed by the results and responded by sharply increasing their price target on the stock. Acacia, which develops optical interconnect products, launched its IPO in May and the earnings report was its first as a public company. RESULTS: Acacia's Q2 EPS came in at 77c, versus the consensus outlook of 30c. The company's revenue came in at $116.2M compared with the consensus outlook of $86M. Acacia provided Q3 EPS guidance of 64c-76c, versus the consensus outlook of 43c. The company expects its Q3 revenue to come in well above the consensus estimate. "Our record second quarter results exceeded our expectations across the board and reflect (our) success in transforming cloud, content and communications networks," said Acacia's CEO, Raj Shanmugaraj. "We continue to see strong global demand for our products, driven by metro and inter-data center network infrastructure buildouts," he added. ANALYST REACTION: Acacia reported "exceptional" results, according to Needham analyst Alex Henderson, who increased his price target on the shares to $100 from $65. Strong growth from China and data centers, along with robust demand from metro network developers, drove Acacia's growth, the analyst stated. These three catalysts are converging to "drive the strongest and most robust demand cycle in the history of the optical market," contended Henderson, who kept a Buy rating on Acacia. Also very upbeat was Deutsche Bank's Vijay Bhagavath, who said the the results were "solid" and raised his price target on the shares to $90 from $60. Calling Acaia's technology "disruptive," the analyst predicted that the company's revenue would grow at a compound annual growth rate of 30%. Moreover, he expects Acacia to generate gross margins in the high 40% range. The analyst reiterated a Buy rating on the shares. Acacia is "firing on all cylinders," and is an "exceptional company," wrote Cowen's Paul Silverstein. Going forward, the company's growth and profitability should continue to be "impressive" predicted Silverstein, who raised his price target on the shares to $90 from $53 and kept an Outperform rating on the stock. WHAT'S NOTABLE: According to Needham's Henderson, the outlook for several other optical component makers is "exceptionally positive" in the wake of Acacia's results. He identified the following stocks as being in that category: Fabrinet (FN), Lumentum (LITE), NeoPhotonics (NPTN), Oclaro (OCLR), and Finisar (FNSR). PRICE ACTION: In morning trading, Acacia soared 30% to $87.90 per share.

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