If anything, the investment case for II-VI (IIVI) is more compelling now than it was in late May, even though the share price is almost 20% lower now on market worries about the health of the optical space. Ciena (CIEN) spooked the market with commentary calling for weaker near-term Tier 1 metro equipment spending, and investors are also now more concerned about a possible slowdown in data center spending, as well as the potential ramification of U.S. actions to limit the access of Chinese companies to various components and technology.
For II-VI, though, the company is starting to see a ramp in 3D sensing and opportunities in markets like 5G and 400G data center are still in the near future (as is sensing, really). On top of that, a few small acquisitions and a licensing agreement with General Electric (GE) have quickly moved II-VI from a "picks and shovels" supplier of silicon carbide (or SiC) wafers to a potential player in chips/devices. Given a strong growth outlook in multiple markets and today's valuation, I think there's a credible case for a double-digit expected annualized return from today's price.
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II-VI Seeing Expanding Opportunities And Shrinking Valuations On Optical Sector Worries
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