Analysts: Challenges for Finisar in Lumentum-Oclaro deal

Today's news of a deal between Lumentum (LITE +6.9%) and Oclaro (OCLR +27%) has nearly all optical-equipment makers on a roll, though analysts see some scaling challenge ahead for Finisar (NASDAQ:FNSR).

Applied Optoelectronics (NASDAQ:AAOI) is up 6.5%; NeoPhotonics (NYSE:NPTN) +6.7%; Emcore (NASDAQ:EMKR) +3.2%; Acacia Communications (NASDAQ:ACIA) +6.3%.

Finisar (FNSR) is +4.5% though the Oclaro deal's a likely negative, says B. Riley FBR, since Finisar was the most likely buyer for Oclaro as it could helped scale up the datacom business.

And Fabrinet (FN -3.4%) will probably have to make price concessions after a combined Lumentum/Oclaro, analyst Dave Kang says. (h/t Bloomberg)

Meanwhile, Finisar needs to keep looking, and Applied Opto could be a good target due in part to higher gross margins, D.A. Davidson says. Acacia or NeoPhotonics are also possibilities.