Shares of companies in the optical sector are trading higher after solid earnings reports from peers Oclaro (OCLR) and Inphi (IPHI).

WHAT'S NEW: After the close of trading on Tuesday night, both Oclaro and Inphi reported quarterly financial results that handily beat analysts' expectations. Oclaro, an optical component maker, reported first quarter earnings per share of 14c on revenue of $135.5M, above analyst expectations of 10c and $131.65M, respectively. Inphi, an optical interconnect maker, reported third quarter EPS of 46c on revenue of $70.7M, also significantly above expectations calling for 38c and $67.89M, respectively, Further, both Oclaro and Inphi provided guidance for the current quarter that were ahead of analyst views. Oclaro forecast second quarter revenue of $146M-$154M, above the consensus of $137.74M, while Inphi sees fourth quarter EPS of 44c-46c on revenue of $74.7M-$76.4M, against analysts' estimates of 40c and $71.79M, respectively. Inphi also announced that it was in a pact to purchase ClariPhy Communications, a provider of ultra-high-speed systems-on-chip for multi-terabit data, long haul and metro networking markets, for $275M in cash.

ANALYST VIEWS: On October 31, Needham analyst Alex Henderson said he believes the "Optical Super Cycle" is going full steam ahead and strongly reiterated his bullish view on the optical sector. The analyst said he believes that most of the angst over the last week around the sector is a non-issue. Henderson is an aggressive buyer on weakness of Oclaro, Inphi, Lumentum (LITE) and NeoPhotonics (NPTN). Finisar (FNSR), Fabrinet (FN), II-VI (IIVI), GigPeak (GIG) and MACOM (MTSI) are also strong recommendations, he added. Further, Henderson believes Acacia Communications (ACIA) has "way overcorrected," and thinks it can rebound on a stronger Q4 outlook and upside to 2017 numbers. Following Oclaro's results, analysts from Cowen, Needham and Piper Jaffray raised their respective price targets on the stock.

PRICE ACTION: Shares of Oclaro are up 3% to $7.56 and Inphi gained nearly 6% to $40.05 in afternoon trading. NeoPhotonics and Acacia are also higher this afternoon.