Rosenblatt has increased its 12-month price target for Viavi Solutions (NASDAQ: VIAV) to $27.00 from $19.00 and reiterated a Buy rating following results for the second quarter of fiscal 2026 and management's guidance. The new target implies upside from Viavi’s prevailing share price of $21.03, which sits close to the company’s 52-week high of $21.52. Data from InvestingPro show that the stock has returned 112% over the past year.
Viavi posted fiscal Q2 revenue of $369 million, beating Rosenblatt’s projection by about $4 million. Adjusted earnings per share were $0.22, $0.03 ahead of the analyst forecast, and the company delivered a 19.3% operating margin versus Rosenblatt’s 17.9% estimate.
Analysts tracked by InvestingPro expect EPS of $0.68 for the full fiscal year 2026, implying continued profit progression from current run rates. On the balance-sheet front, Viavi reported a current ratio of 1.99, indicating that liquid assets considerably exceed short-term liabilities.
Total revenues rose 36% year-over-year and 24% quarter-over-quarter. These figures include a $43 million contribution from Spirent HSE. Excluding the Spirent HSE contribution, organic growth still registered 20% year-over-year and 9% quarter-over-quarter. Rosenblatt noted, however, that the Spirent HSE contribution fell short of the previously guided $50-55 million range, a shortfall attributed to a Federal shutdown.
For the third quarter of fiscal 2026, Viavi offered revenue guidance in a $386 million to $400 million range. That outlook assumes approximately $50 million of revenue from Spirent HSE and equates to organic growth of about 21% year-over-year and 5% quarter-over-quarter.
Rosenblatt emphasized shifts in Viavi’s end-market exposure as part of its reasoning for the higher target. The firm highlighted that exposure to telecom service providers has declined to under 40% of sales while testing for AI data centers now constitutes more than 45% of the business. Military and aerospace markets account for roughly 15% of revenue. Rosenblatt described Viavi as "extremely well positioned both technically and competitively" across multiple AI data center testing product areas.
That said, valuation metrics are elevated. Viavi trades at a price-to-earnings ratio of 345 and an EV/EBITDA multiple of 33.6, which Rosenblatt and InvestingPro flag as premium relative to the platform's Fair Value estimate.
Other firms have also responded to the quarterly report. Stifel raised its price target on Viavi to $24 while maintaining a Buy rating after the company beat consensus revenue and EPS expectations. Consensus revenue was reported at $365 million and consensus adjusted EPS at $0.19, both below Viavi’s actual results of $369 million and $0.22, respectively.
Operationally, Viavi’s Network and Service Enablement segment exhibited leverage as data center production volumes increased, contributing to the improved margin performance. Separately, a Viavi subsidiary, Inertial Labs, launched the IRINS system - a Low Earth Orbit-aided navigation solution intended to operate in degraded environments and counter spoofing and jamming threats that can affect military missions and critical infrastructure.
Summary
Rosenblatt raised its Viavi target to $27 after fiscal Q2 results outpaced forecasts and guidance pointed to continued organic growth. The company's mix is shifting toward AI data center testing and defense-related work, boosting the firm’s competitive positioning according to the analyst. Despite operational momentum and a strong liquidity profile, valuation multiples remain elevated versus fair value measures.
Key points
- Rosenblatt lifted its price target to $27 from $19 while maintaining a Buy rating, noting strong Q2 results and favorable end-market mix.
- Fiscal Q2 revenue was $369 million and adjusted EPS $0.22; operating margin came in at 19.3% and the current ratio stood at 1.99.
- Viavi’s exposure is shifting away from telecom service providers toward AI data center testing (45%+ of revenue) and military/aerospace (15%), impacting technology and defense market dynamics.
Risks and uncertainties
- Valuation is rich - Viavi trades at a P/E of 345 and an EV/EBITDA of 33.6, which suggests elevated expectations relative to Fair Value estimates.
- Revenue contributions from Spirent HSE have been variable; the $43 million contribution in Q2 fell short of a $50-55 million forecast due to a Federal shutdown, illustrating exposure to external disruptions in government-related activity.
- While exposure to telecom service providers has declined to under 40%, continued reliance on particular end markets could influence near-term growth if demand shifts.
Investors weighing Viavi's prospects will need to balance the company’s accelerating AI data center testing revenue and improved margins against premium valuation multiples and sensitivity to external events that can affect specific revenue contributions.