Clearfield's Surge In Rural Broadband Investments, Expanding European Market Opportunities Underline Positive Outlook: Analyst

Needham analyst Ryan Koontz reiterated a Buy rating on Clearfield, Inc. CLFD, raising the price target to $60 from $50.

The analyst thinks Clearfield is already benefiting from a surge in rural broadband infrastructure investment, with the vast majority yet to be deployed.

The company is also evaluating new growth opportunities in Europe that could benefit from 2025.

Also Read: Clearfield Raises $120M Via Upsized Stock Offering At Over 9% Discount

In addition, CLFD's new SeaChange product and its growing focus on capturing share gain in homes connected market is a tailwind. 

With a return to normalized demand expected in FY24, the company aims to leverage disruptive new products for the homes-connected segment, where its current share is meaningfully lower than its "homes passed products." 

The analyst believes the company's revised FY guidance is conservative, which leaves ample room for beats. 

The analyst adds that Clearfield's prospects are further boosted by increasing gov't subsidies.

However, the analyst cautioned that inventory overhang is a strong headwind for CLFD and the broader industry, with less certainty as to when it will pass. 

In addition, labor shortages are a headwind for both the company and the industry, slowing the pace of installs and limiting y/y growth.

Price Action: CLFD shares are trading higher by 3.5% to $48.38 on the last check Friday.

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