Acacia Communications, Inc. (NASDAQ: ACIA) is achieving rapid new digital signal processing introductions, which should allow the company to gain share, lock in customers and strengthen its competitive position in the next chip development cycle, according to Needham.
Acacia’s competitors are unable to keep pace with its pace of new DSP introductions, Henderson said in the Monday upgrade note. (See his track record here.)
Both NTT Electronics and Nokia (NYSE: NOK), which together account for around 20-25% of the DSP market, are facing issues in their 600G DSP development programs, the analyst said. This could push their 600G products back by six months to a year, he said.
With competitors likely to miss the 600G cycle, Acacia could gain share and increase its advantage in the next chip development cycle, Henderson said.
Despite this, Acacia’s stock has been under pressure due to concerns around issues with its DSP, the analyst said.
Surveys of Acacia’s customers do not highlight any meaningful issues, and the concerns seem misplaced, he said.
The company also seems to be “substantially ahead of [its] competitor” in the launch timing of the ZR/ZR+ products, Henderson said.
This should help Acacia gain share “at the large Web 2.0 Titans,” the analyst said.
Acacia Communications shares were trading higher by 6.61% at $50.28 at the time of publication Monday.
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