Viavi Solutions (VIAV) Could Be 35% Undervalued As 6G Security Funding Draws Focus

Viavi Solutions (VIAV) has attracted fresh attention after securing €1.1 million in funding from the European Smart Networks and Services Joint Undertaking and Horizon Europe to support the SHIELD-6G cybersecurity project.

See our latest analysis for Viavi Solutions.

Alongside this 6G security funding, Viavi Solutions has seen the share price climb 13.2% over the past week but remain down 16.4% over the past month. The year to date share price return of 130.3% and 1 year total shareholder return above 300% point to strong underlying momentum.

If Viavi’s 6G work has caught your eye, it could be a good moment to broaden your watchlist with other future focused plays using the 54 AI infrastructure stocks

Bulls point to Viavi Solutions’ 6G exposure and sharp 1 year share price surge, while bears focus on recent share price volatility, current losses and a low value score. Which story do the numbers support as valuation comes into focus?

Most Popular Narrative: 35.1% Undervalued

The most followed valuation narrative for Viavi Solutions pegs fair value at $64.43 per share, compared with a last close of $41.80, framing a sizeable gap for investors to assess.

Viavi is experiencing robust and sustained demand across the data center ecosystem, with customers updating optical connectivity to 400G, 800G, and now 1.6T, enabling multi-year upgrade cycles and expanding its total addressable market, which should drive structural revenue growth through 2026 and beyond. The rapid proliferation of fiber broadband deployments for both hyperscale data interconnect and traditional carrier networks, coupled with aggressive announced spending by North American fiber operators, points to a significant near-term acceleration in fiber-related test equipment orders supporting higher future revenues.

Read the complete narrative.

Curious what sits underneath that higher fair value for Viavi Solutions? The narrative leans on faster top line expansion, a sharp swing into profitability and a richer future earnings multiple. Want to see how those building blocks fit together and where the assumptions become most ambitious? The full narrative lays out the numbers and timing in detail.

Result: Fair Value of $64.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this Viavi Solutions narrative still depends on telecom and service provider spending recovering, and on acquisitions like Inertial Labs and Spirent assets integrating smoothly without eroding margins.

Find out about the key risks to this Viavi Solutions narrative.

Another View on Viavi Solutions Using Cash Flows

While the popular thesis flags Viavi Solutions as undervalued at a fair value of $64.43 per share, our DCF model presents a different perspective. On this view, Viavi at $41.80 is trading above an estimated future cash flow value of $26.05, which points to overvaluation instead. Which set of assumptions feels more realistic to you?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Viavi Solutions for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 38 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment clearly split for Viavi Solutions, now is a good time to review the underlying data, pressure test the assumptions and weigh both sides of the story. To judge the balance between concerns and optimism for yourself, take a closer look at the 2 key rewards and 3 important warning signs.

Looking for more investment ideas beyond Viavi Solutions?

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• Target potential mispricings by reviewing companies that screen well on valuation and quality using the 38 high quality undervalued stocks.
• Strengthen your focus on resilience by checking out companies highlighted in the 79 resilient stocks with low risk scores.
• Hunt for lesser known opportunities with solid fundamentals in the screener containing 20 high quality undiscovered gems.

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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