VIAV NSE Surges 54% but Valuation Remains Stretched – DeepValue Reiterates STRONG SELL

What happened

VIAV's NSE segment surged 54.4% in fiscal Q3, driven by AI data center demand and Spirent acquisition contributions. The DeepValue report acknowledges strong near-term momentum but flags extreme valuation (P/E ~304x, EV/EBITDA ~37x) and elevated leverage from the Spirent deal. The report maintains a STRONG SELL rating, citing that current prices embed aggressive assumptions for sustained AI growth and flawless integration. Insider selling by the CEO and other executives in late 2025 adds a cautionary signal. The stock is up ~94% over the past year, and the risk/reward skews negative given limited downside protection.

Implication

The strong NSE growth is real, but the stock at ~$20.70 already prices in continued acceleration and flawless Spirent integration. With net debt/EBITDA above 2x and interest coverage below 3x, any disappointment could trigger a sharp multiple compression. Wait for a better entry near $14 or until fundamentals prove the thesis.

Thesis delta

The news confirms robust NSE growth, but the DeepValue report's STRONG SELL thesis remains unchanged. No shift in the call: valuation is stretched, leverage is elevated, and risk/reward is poor.