IBD Stock Analysis
- CALX stock bounced bullishly off its 21-day exponential moving average line
- Owns IBD Relative Strength Rating of 95 and Composite Rating of 98
- Has Accumulation/Distribution Rating of B+, indicating institutional buying
Industry Group Ranking
* Not real-time data. All data shown was captured at
2:04PM EST on
Calix (CALX) is the IBD Stock Of The Day as shares of the telecom network gear maker rebound off their 21-day exponential moving average in solid volume. CALX stock belongs to the IBD Computer Networking industry group, which ranks ninth out of 197 groups that IBD tracks.
Calix is on the IBD Tech Leaders stock list along with Arista and Digi. Arista recently topped estimates with its third-quarter earnings report. And Digi stock is getting a lift from the industrial Internet of Things.
On the stock market today, CALX stock rose 6.6% to close at 69.82. Calix stock has retreated 13% in 2022, outperforming the S&P 500, which is down nearly 17%.
CALX Stock: Fiber Networks Expand In Rural Areas
Calix’s biggest growth driver has been the build-out of fiber-optic wiring to homes and businesses by AT&T (T), Lumen Technologies (LUMN) and Frontier (FYBR). In addition, federal government funding for broadband projects is expected to kick in. The funding aims to end the digital divide in rural America.
On Oct. 24, Calix reported earnings of 34 cents a share, down 3% from a year earlier, but topping estimates for 23 cents. Revenue rose 37% to $236.3 million, topping estimates of $215.2 million.
The company forecast fourth-quarter earnings per share of 25 cents and revenue of $240 million, vs. estimates of 23 cents on revenue of $218 million.
With its roots in selling network access equipment, Calix restructured in 2017.
Calix Stock: Broadcom Chip Supplier
Calix shifted all research and development to software. It now resells network access gear manufactured by other companies. Some gear uses Broadcom (AVGO) chips.
New software offerings include “Calix Cloud,” an analytics platform that leverages network and subscriber experience data. Calix targets customer support, marketing and operations. Calix also sells fully managed services for broadband service providers.
“We believe Calix Cloud will drive significant long-term upside to EPS power and federal stimulus catalysts have yet to play out,” Jefferies analyst George Notter said in a report. Notter has a buy rating on CALX stock.
21-Day Exponential Moving Average
“Calix provides a very good look at the overall FTTP (fiber-to-the-premises) marketplace,” Notter said. “They have nearly 2,000 customers, 80% to 82% of which are Tier 2 or Tier 3 (smaller) service providers.”
From a technical view, Calix stock has rebounded off its 21-day exponential moving average. That chart line is an alternative to 10-day and 50-day moving averages.
Meanwhile, the Relative Strength Rating of CALX stock is 95 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS rating of 80 or better.
The company holds a nearly tiptop IBD Composite Rating of 98 out of 99.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Calix Stock: Institutional Ownership Strong
CALX stock owns an Accumulation/Distribution Rating of B+, indicating institutional buying of shares. The rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
During the coronavirus pandemic, the Federal Communications Commission rolled out a new program called the Rural Digital Opportunity Fund (RDOF). That replaced the Connect America Fund. Initial RDOF funding was about $9.2 billion.
In addition, the American Rescue Plan Act provided funding to local governments to carry out critical capital projects that directly enable work, including broadband.
CALX Stock: Private Equity Firms
Also, in 2021, the Biden administration and Congress pushed through an expected $67 billion in federal broadband subsidies. That was part of the Infrastructure and Jobs Act. It includes $42.5 billion for distribution to states through the Broadband Equity, Access and Deployment program and an additional $15 billion in the next phase of RDOF.
Most analysts do not expect the bulk of federal funding to reach telecom companies until 2024 or later.
Meanwhile, telecom firms are expected to increase their own capital spending in rural areas. Private equity firms have provided some funding. It’s believed AT&T is in talks with private equity firms.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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