Shares of Finisar Corp. fell 3.7% in premarket trading Tuesday after analysts at Goldman Sachs downgraded its stock to sell. The analysts, led by Doug Clark, see a “combination of cyclical risks and company specific product exposures that could pressure revenues and margins.” While he contends that the company’s relationship with Apple Inc. seems promising, he believes investors are downplaying potential execution risks for the company. In addition, he points to “rising capacity and weaker demand” for optical components, which is causing oversupply in the market. “We believe Finisar could be most at risk given its vertical integration,” Clark wrote. Finisar’s stock has gained 12% so far in 2018, while the S&P 500 Index is up 4.2%.
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