Viavi Solutions Inc.

Viavi’s result for the second quarter of 2023 performed better than Wall Street expectations as the company delivered an all-around beat, driven by NSE performance aided by stabilization in service provider demand and spending. The company’s OSP business increased year over year and performed within the forecast. NSE decreased sequentially and year over year due to weaker fiber and wireless lab product demand. Besides, their recently purchased resilient PNT product from Jackson Labs received a lot of traction. The management anticipates a recovery in the market for field instruments by the middle of the year. Additionally, they anticipate that several significant cable operators will begin updating their networks in 2023, which would increase demand for their cable field instruments. There might be a decreased year-over-year demand for 3D sensing goods in the year’s second half, driven by a decline in end-user demand. Viavi is implementing a limited restructuring plan for its NSE and OSP businesses in light of the weaker near-term demand environment. This plan aims to align operating expenses with the anticipated lower near-term customer demand and to redeploy investment to strategic growth areas to accelerate revenue and profitability growth as end markets recover. We give Viavi a ‘Hold’ rating with a revised target price.