Has Viavi’s 78% Surge in 2025 Already Priced In Its 5G and Cloud Ambitions?

• If you are wondering whether Viavi Solutions remains a smart consideration after its big run up, or if the easy money has already been made, this article will help you cut through the noise and focus on what the valuation is really telling us.
• The stock has climbed an impressive 78.2% year to date and 62.9% over the last year. However, the last week has seen a modest 1.7% pullback and the 30 day return sits at a quieter 1.1%.
• Behind those moves, Viavi has stayed in the spotlight with ongoing discussion around its role in 5G network testing and fiber infrastructure, as carriers and equipment makers continue to upgrade their networks. Investors have also been watching how Viavi positions itself in emerging areas such as cloud, automation and network visibility, which shapes expectations for its longer term growth story.
• Despite that optimism, Viavi currently scores just 1/6 on our valuation checks. We will break down why traditional valuation methods send mixed signals, and then finish with a more holistic way to think about what the market might be missing.

Viavi Solutions scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Viavi Solutions Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting its future cash flows and then discounting those dollars back to their value in the present.

For Viavi Solutions, the latest twelve month Free Cash Flow stands at about $74.1 million. Analysts and extrapolated estimates see this rising gradually, with forecast Free Cash Flow reaching around $169.9 million in 2035, based on a 2 Stage Free Cash Flow to Equity framework that blends near term analyst inputs with longer term growth assumptions from Simply Wall St.

When all those projected cash flows are discounted back to today, the model arrives at an intrinsic value estimate of roughly $10.05 per share. That compares to a market price that implies the stock is about 79.1% above its DCF based fair value, suggesting investors are currently paying a rich premium for future growth.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Viavi Solutions may be overvalued by 79.1%. Discover 903 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Viavi Solutions.

Approach 2: Viavi Solutions Price vs Sales

For companies like Viavi that are still building profitability but already generate meaningful revenue, the Price to Sales ratio is often a more practical valuation yardstick than earnings based metrics. It lets us compare what investors are willing to pay for each dollar of sales, which tends to be more stable than earnings for businesses still scaling margins.

In general, faster growth and lower risk justify a higher multiple, while slower growth or higher uncertainty call for a lower, more conservative ratio. Viavi currently trades at about 3.51x sales, which is noticeably above both the Communications industry average of 1.92x and its peer group average of 2.21x. On the surface, that suggests the market is already paying a premium for the company’s growth prospects.

Simply Wall St’s Fair Ratio helps refine this view by estimating the sales multiple Viavi should trade on, given its growth outlook, profitability profile, industry positioning, market cap and risks. This proprietary 5.23x Fair Ratio is more tailored than a simple peer or industry comparison, because it adjusts for company specific fundamentals rather than assuming all players deserve the same multiple. With the current 3.51x Price to Sales sitting well below the 5.23x Fair Ratio, the shares appear attractively priced on this framework.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Viavi Solutions Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to attach your story about Viavi Solutions to the numbers by linking your assumptions for future revenue, earnings and margins to a financial forecast, and then to a fair value that you can easily compare with today’s share price.

On Simply Wall St’s Community page, Narratives are an accessible tool used by millions of investors. You can quickly set or adjust your own expectations, see the model update in real time when new information such as earnings or major news is released, and immediately see how your updated fair value compares with the current price.

For example, one investor might build a bullish Viavi Solutions Narrative that leans into aggressive growth in AI data centers and aerospace and arrives at a fair value well above $18.43. Another more cautious investor might emphasize integration and cyclical risks to arrive at a fair value closer to or even below the current market price. Narratives makes both perspectives clear, quantified and comparable.

Do you think there's more to the story for Viavi Solutions? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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