Viavi Solutions (VIAV) Deep Dive: Why We Own It

Why We Own Viavi (VIAV)

Viavi is the newest company in our portfolio. We added it in the June 2026 rebalance, and the numbers led the decision. Its sales grew 30.6% over the past year, which we measure as the TTM. In the latest quarter alone, sales jumped 42.8%. Both figures are well ahead of the typical technology company, where sales grew about 17.9%.

The share price rose 469% in the past year. That beat both its closest rivals, up 376% as a group, and the wider technology sector, up 67%. The trend in forecasts supports the move. In the last 30 days, analysts raised their profit estimates for Viavi 8 times and lowered them zero times. Their forecast for next year's profit is 27% higher than it was 90 days ago.

Viavi does not lead on every measure, and we will not pretend it does. It still loses money on its official accounts after restructuring and takeover costs. The shares also cost more than those of its rivals. We own it for the mix of fast growth, a profit recovery that has already started, and a unique ink business that few competitors can match.

At a Glance

The table below compares Viavi with two groups of other companies. All figures cover the past year, which we label TTM. The profit margins use GAAP, the official accounting rules, with no adjustments. Three terms may be new. EBITDA margin measures core cash generation. Price-to-Book compares the price with the company's accounting value. Forward P/E compares the price with expected profit.

The direct rivals are the seven US-listed companies that compete in Viavi's own markets. Two test and watch over networks (Keysight KEYS and NetScout NTCT). Five make optical parts and systems (Lumentum LITE, Coherent COHR, Fabrinet FN, Applied Optoelectronics AAOI, and Ciena CIEN). Two of them, LITE and CIEN, are also Veloris Capital holdings, which we mention for full transparency. The wider sector is the 79 largest US-listed technology companies by market value. We calculated every figure ourselves from company filings and daily share prices.

Why Viavi Grows Faster Than the Average Tech Stock

Viavi works in an unusually fast part of the technology world. Its direct rivals grew sales by about 29.8% in the past year. The wider technology sector grew only 17.9%. Viavi roughly matches its fast-growing rivals and clears the wider sector with ease.

Looking ahead, Viavi is expected to grow a little slower than those direct rivals. They benefit from the same AI demand and are forecast to grow faster next year. Viavi still beats the wider sector on expected sales and profit growth. The honest summary: a strong grower, but not the fastest in its own group.

The trend in forecasts is the clearest signal. Over the last 30 days, analysts raised their Viavi profit estimates 8 times and cut them none. Their forecast for next year is 27% higher than three months ago. When a company keeps beating expectations and forecasts keep rising, the market usually treats the recovery as real.

The Business — Two Engines, One Company

Viavi runs two separate businesses. The first is called Network and Service Enablement. It makes the tools that test and monitor networks in the lab, in the factory, and out in the field. Its customers include phone companies, the hyperscaler data centers, and defense and aerospace programs. This business grows with the AI build-out, because every new fiber line and high-speed switch must be tested before it goes live.

The second business is called Optical Security and Performance. It makes the special light-bending inks and films that central banks print into banknotes to block counterfeiters. It also makes optical filters for 3D sensing and aerospace. In 2024, Viavi bought part of a rival called Spirent, adding tools for testing very fast Ethernet and network security. That deal strengthened the testing business and widened Viavi's lead.

“Viavi gets early access to the first sample chips that will power tomorrow's networks, so its testing tools are ready before those networks even exist. And its security inks sit inside the world's banknotes under contracts with central banks that last for decades. That pairing is very hard to copy.”

Profits Are Starting to Turn

Viavi is not yet a high-profit company, but the direction is clear. Its quarterly operating profit grew from about $7.5M two years ago to $42.1M in the latest quarter. Its EBITDA margin is now near 16.0%. The company also reported that the profit margin in its network business nearly doubled from a year earlier.

The official, bottom-line numbers still trail the operating story. Over the past year, Viavi's net profit margin was -4.0%, held down by restructuring and the cost of taking over Spirent. That is behind its direct rivals, a +9.9% median, and the wider sector at +18.4%. The recovery has started but is not finished, and we treat it that way.

On its balance sheet, Viavi owes about $636M more than it holds in cash, a figure we call net debt. It has $499M of cash on hand. That debt level is manageable for a company that generates cash, and Viavi has been paying it down early. We keep an eye on the debt, but it does not threaten our case at today's level of cash generation.

Earnings Are Climbing

Earnings per share have risen for seven quarters in a row, and each one met or beat what analysts expected. The chart below shows the climb from $0.06 to $0.27 per share. The latest quarter was up about 80% from a year earlier.

For a recovery story, the forecast matters most. Analysts expect earnings of about $0.94 per share this financial year and $1.28 next year. That is growth of roughly 36.6%. The trend backs it up: 8 upward revisions in the last 30 days and none down, plus that 27% rise in next year's estimate over three months. Viavi also holds about $350M in orders that customers have already signed, most of which should turn into sales within a year. Those signed orders make the forecast more reliable.

Valuation — Expensive, and Why We Accept It

Viavi is not cheap. Its shares trade at 15.6 times their Price-to-Book value and 42.7 times the profit analysts expect next year, a measure called Forward P/E. The Price-to-Book figure is well above the typical direct rival at 9.5 times. The profit multiple is below the rival group at 51.8 times but above the wider sector at 31.1 times. This is a premium price, and the growth has to earn it.

The average analyst price target is $64.43. That is about 20% above the recent price of around $53. The ratings are mostly positive: four say strong buy, one says buy, three say hold, and one says strong sell. These are analyst opinions, not a forecast we stand behind, and targets can change fast when results shift.

We judge the price in two ways. First, the growth and the rising forecasts do most of the work. Profit is expected to grow near 37% next year, and analysts keep raising their numbers, which supports a higher price. Second, our own testing backs this up. We run several versions of our strategy side by side every day and only put the best one into the live account. Over a long period, the version that avoided expensive stocks did much worse than the versions that did not. We treat that as a result we observed ourselves, not as proof that ignoring price carries no risk.

How Viavi Passed Our Three-Pillar Process

Viavi is not a personal favorite or a stock tip. It earned its spot through a set process that every holding must pass again each month. Our choices are data-driven, not gut-driven, and only the best ideas stay in. The process has three pillars: Stock Universe → Optimizer → Risk Overlay.

Pillar 1 — The Stock Universe Filter

The first pillar is a wide screen of stocks. It lets the companies with the strongest results rise to the top of the list, whatever their size or sector. We look at how profitable a company is, how fast it grows, how reliable its earnings are, which way analyst forecasts are heading, and how its share price is performing. Viavi passed on its speeding-up sales, its strong run of rising forecasts, and its price strength, even though its current margins sit below the sector. We explain how we size the final list in our note on why we hold 15 to 30 stocks.

Pillar 2 — The Optimizer

The second pillar, the Optimizer, decides which qualified names to hold, not how big each position should be. Every holding gets the same size within the part of the account that is invested. Right now we hold about 26% in stocks across 15 names, so each one is roughly 1.7% of the whole account, with the rest in cash. If you choose to copy our portfolio, eToro automatically mirrors our trades into your own account, in proportion, and at your own responsibility. You stay in control of your account at all times.

Pillar 3 — The Risk Overlay

Viavi has a Beta of 1.19, so it tends to swing more than the market. That is exactly why the third pillar, the Risk Overlay, matters. Every night, the system recalculates more than 20 risk signals across markets and sets how much of the account should be in stocks the next day. It is built to limit losses in downturns, not to predict prices. Right now it is in braking mode, with about 26% in stocks. Knowing when to speed up and when to brake is how a fast-moving holding like Viavi can sit in the portfolio without pushing the risk of the whole account too high. You can see the current setup in our most recent monthly review.

Catalysts on the Radar

• Results for the financial fourth quarter, expected in early August 2026. We will watch the network-business margin and whether new orders keep ahead of shipments.
• Continued spending by AI and big cloud data centers, which drives demand for high-speed network testing.
• Progress in folding in the Spirent tools for fast Ethernet and security testing.
• Banknote redesigns and currency-security cycles, which lift the high-profit ink business.
• More upward profit revisions if margins keep widening at the recent pace.

“We own Viavi for a recovery the numbers already show: faster sales, rising forecasts, and a profit line that has started to climb. We respect the high price by keeping the position the same size as every other holding and letting the Risk Overlay manage the downside.”

Related reading: our Micron (MU) deep dive covers another holding riding the AI infrastructure cycle, and Sector Rotation: Are We an AI Portfolio? explains how names like Viavi fit a balanced, diversified portfolio rather than a concentrated AI bet.

_Viavi Solutions (VIAV) is a current Veloris Capital portfolio holding as of the publication date. Past performance is not an indication of future results. Your capital is at risk._

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