Stifel increased its price objective for Viavi Solutions (NASDAQ:VIAV) to $24.00 from $20.00 and retained a Buy rating following the company’s fiscal second-quarter 2026 earnings report. The analyst move comes after results that outpaced consensus on multiple metrics and amid a substantial share-price rally over the last year.
Viavi reported quarterly revenue of $369 million, an adjusted operating margin of 19.3%, and adjusted earnings per share of $0.22. Those results topped consensus estimates of $365 million in revenue, a 17.8% adjusted operating margin, and $0.19 in adjusted EPS. In a slightly different presentation of the quarter’s top line, the company was also reported to have generated $369.3 million in revenue versus a forecast of $365.25 million, representing a 15.79% positive surprise on EPS.
The shares have appreciated sharply over the past year, returning 112% and trading at $21.03 at the time of the report, which is about 1% below the stock’s 52-week high of $21.52. InvestingPro data cited in the report shows Viavi trading at a price-to-earnings ratio of 345, signaling a premium valuation relative to typical market multiples.
Segment-level performance highlighted a continued transition in the company’s business mix. The Network and Service Enablement - NSE - segment benefited from operational leverage as data center production volumes accelerated. According to InvestingPro metrics cited, Viavi has delivered 15.6% revenue growth over the last twelve months, taking trailing twelve-month revenue to $1.15 billion. Gross profit margin remains elevated at 59.5%, and analysts are projecting net income growth for the year.
The Optical Security and Performance - OSP - segment posted better-than-expected revenue thanks to a recovery in anti-counterfeiting pigments, although margins in the unit came in slightly below Street expectations. Management’s outlook for the fiscal third quarter of 2026 included revenue guidance of $393 million, a 19.7% adjusted operating margin, and $0.23 in adjusted EPS - each figure described as significantly above consensus.
Drivers cited for data center expansion include demand from the semiconductor and memory ecosystems alongside increasing hyperscaler adoption of field instruments. The Aerospace and Defense - A&D - business was also described as showing strength, supported by visibility on the Resilient PNT program. Stifel noted that the NSE segment mix is shifting to more than 45% data center, which now exceeds the service provider mix at less than 40% and A&D at more than 15%. The broker said this mix shift validates management’s structural "speedboat strategy" to support growth and margin improvement.
On cost structure, Viavi announced a restructuring plan expected to yield $30 million in annual savings. The company’s quarterly results and forward guidance have drawn attention from analysts and investors, reflecting the firm’s ability to beat market expectations on both earnings and revenue in the most recent quarter.
Key points
- Stifel raised its price target to $24 and maintained a Buy rating following fiscal Q2 2026 results that beat consensus.
- Quarterly results: $369 million in revenue, 19.3% adjusted operating margin, and $0.22 adjusted EPS, beating estimates; fiscal Q3 guidance also exceeded expectations.
- Segment dynamics: NSE is increasingly driven by data center demand, OSP revenue recovered from anti-counterfeiting pigments, and A&D remains supported by Resilient PNT program visibility - sectors impacted include semiconductors, data centers, and aerospace & defense.
Risks and uncertainties
- Valuation risk - the company is reported to trade at a P/E of 345, indicating a premium that could pressure the stock if growth slows.
- Margin pressure in OSP - while revenue improved in Optical Security and Performance, margins came in slightly below expectations, which could weigh on consolidated profitability.
- Execution on restructuring - Viavi has announced a plan targeting $30 million in annual savings; realizing those savings will depend on execution, which introduces implementation uncertainty.