Smartoptics (Buy, TP: NOK21.00) - Set for return to growth

We are seeing early signs of recovery in Smartoptics’ markets following a challenging downcycle, and see a plausible path to revenue growth for the company from Q4. While we have made material cuts to our estimates, we continue to like the story on our view of an approaching upcycle in optical networking equipment and what appears to be AI-induced growth in demand for bandwidth in DCI and enterprise networking. We reiterate our BUY and NOK21 target price.

Smartoptics (Buy, TP: NOK21.00) - Q3 a relief, but tough comparables s...

While Smartoptics’ Q3 results were below our estimates, we found the decent underlying growth in the broad customer base and cost discipline a source of relief given the challenging macroeconomic backdrop. There will probably be at least one more quarter with tough comparables weighing on growth before metrics start to improve. We reiterate our BUY but have lowered our 2023-2025 estimates and our target price to NOK21.

Smartoptics (Buy, TP: NOK23.00) - Comps to burden near-term growth

With our analysis of the exceptional growth drivers in the past 12–18 months, we have materially reduced our 2023–2025 estimates on tougher near-term comparables. Despite this, we maintain our view on Smartoptics’ long-term attractiveness and positioning. We reiterate our BUY, but have lowered our target price to NOK23 (36) on our reduced forecasts.

Smartoptics (Buy, TP: NOK36.00) - Long-term view reinforced

Q1 was the quarter when the higher operating investment plans were executed, even more meaningfully than we had expected. Still, we find the overall Smartoptics investment case fundamentally reinforced by this report, in terms of risk profile and long-term strength, even though we have lowered our 2023–2025e EBITDA 8%, 6% and 3%, respectively. Following a change of analyst, we have raised our target price to NOK36 (35) and reiterate our BUY.

Smartoptics (Buy, TP: NOK35.00) - Solid and more normal Q1e

We have made only minor changes to our 2023–2025 forecasts for Smartoptics, which we believe continues to build customer momentum, exploiting an inflection point for its optical networking technology. Q1 is set to be solid but more normal in terms of growth and more in line with the same period last year, following a blow-out finish to 2022. We reiterate our BUY and NOK35 target price.

Northern Lights

Smartoptics (Buy, TP: NOK35.00) - Right strategy, right execution

We have again raised our forecasts for Smartoptics, increasing our 2023–2025e EPS by 14–16%. As the company expands and builds a track record of execution consistency and macro resilience, we believe a limited multiples expansion is warranted. We have raised our target price to NOK35 (28) and reiterate our BUY.

Northern Lights

Smartoptics (Buy, TP: NOK28.00) - Steady value creation

We believe optical networking challenger Smartoptics has gone from strength to strength following its Euronext Growth listing last year, and is planning to list on the Oslo main board. We find the long-term growth and margin case validated and have raised our target price to NOK28 (26) and reiterate our BUY.

Northern Lights

Smartoptics (Buy, TP: NOK26.00) - Expected to be on track in Q3

We have slightly raised our 2022–2025e EPS estimates due to the strengthening of the USD, balanced by a slightly lowered top-line forecast. The FX effect on opex is significantly accretive to the operating margin, and we have factored in only light macroeconomic headwinds due to our view of Smartoptics as relatively resilient. We expect 22% YOY revenue growth and an 18% EBITDA margin for Q3 and a reiterated outlook. We reiterate our NOK26 target price and BUY.

Smartoptics (Buy, TP: NOK26.00) - At an inflection point

We find networking challenger Smartoptics excellently positioned to benefit from an ongoing paradigm shift in the industry that we believe constitutes a key inflection point for the company’s growth. The IP and optical layers of broadband networks are set to collapse into a single converged architecture (IP over DWDM) in the coming years, which is already leading to significant interest in Smartoptics’ products. We consider our medium- to long-term forecasts increasingly de-risked and have raise...

Smartoptics (Buy, TP: NOK25.00) - Shortages set to ease

We reiterate our BUY, NOK25 target price and forecasts ahead of the Q2 results, and note Smartoptics’ attractive growth and valuation profile. We believe it continues to navigate the components landscape well and see improvements in bottleneck factors going into 2023. While enterprise demand may weaken somewhat in a cyclical downturn, secular growth drivers, telecom-operator demand and waning supply constraints should offset this in our view.

Northern Lights

Smartoptics (Buy, TP: NOK25.00) - Target price raised again

A growth company with earnings momentum valued at a 2023e P/E of 10.0x is not too common. Smartoptics is set to fuel its long-term growth further by investing more in R&D to capitalise on its excellent strategic and industrial position. We have raised our 2022–2024e forecasts once again and reiterate our BUY, and have raised our target price to NOK25 (21). We view Smartoptics as a quality microcap with >110% upside potential.

Northern Lights

Smartoptics (Buy, TP: NOK21.00) - Seeing strong commercial traction

While supply-chain constraints are still creating short-term disturbances in the networking industry and remain a risk for 2022, we expect this to be offset by firm commercial traction in Q1. Despite removing Russia revenues, we have raised our 2022–2024 forecasts and reiterate our BUY: we view Smartoptics as a quality microcap with attractive upside potential.

Russia sanctions: potential impact

According to Reuters, the US administration is preparing sanctions in the event of a further escalation in Ukraine, including export controls that would potentially make exports of telecom equipment to Russia unviable. The report says this could include exports of components made with US tools, implying that local production set-ups being planned by Ericsson and Nokia could also be affected. While we see the prospects as negative, we note that: 1) Russia accounts for just a fraction of sales for...

Smartoptics (Buy, TP: NOK21.00) - EPS momentum with 110% upside potent...

Smartoptics beat our forecasts again, leading us to raise our forecasts and target price. The strong Q4 results were accompanied by management commentary that we consider bullish. While we recognise the weak sentiment for small-cap technology stocks, we believe a much stronger positive share-price reaction was warranted. We reiterate our BUY and see 110% upside potential from the current share price to our new target price of NOK21 (19).

Smartoptics (Buy, TP: NOK19.00) - Backlog set to build up

A natural focus in the Q4 report should be the company’s management of the supply-chain shortage. Beyond this, the main focal point should be underlying business traction and the outlook for 2022e. Our updated forecasts factor in further improvements in optical routing demand for 5G backhaul and substantial extra spot-market costs. The latter are set to be more than offset by a beneficial effect from FX, according to our calculations. We reiterate our BUY and have raised our target price to NOK1...