Infinera’s investment in new optical networking technology for the data center appears to be paying off, with the company announcing year-over-year revenue growth of 25 percent and earnings per share (EPS) of 13 cents for its second quarter, ending June 27, beating analyst expectations.

Infinera shares jumped 12 percent Thursday morning, up $2.65 to $23.94, touching a new 52-week high. The company reported revenue of $207.3 million for the second quarter, compared to $186.9 million in the first quarter of 2015 and $165.4 million in the second quarter of 2014.

Infinera executives said the number of customers for CloudXpress, its product for data center interconnect (DCI), increased to 12 in second quarter, up from 7 in the first quarter. (Among the 12 is Equinix, announced earlier this week.) The company expects a boost in sales toward the end of the year as the 100-Gb/s interfaces become available.

The company reported GAAP net income for the quarter of $17.9 million, or 13 cents per diluted share, compared to $12.4 million, or 9 cents per diluted share, in the first quarter of 2015, and $4.8 million, or 4 cents per diluted share, in the second quarter of 2014. Non-GAAP earnings per share -- which strips out special charges -- was 18 cents, beating analyst consensus expectations by 2 cents. The company reported $46 million in cash flow for the quarter.

Gross margins also came in higher than some estimates, at 47.4 percent.

Infinera CEO Tom Fallon called the quarter "outstanding," saying it was "driven by robust demand across multiple verticals."

Michael Genovese, an analyst at MKM Partners who has been prescient in his bullish calls on Infinera stock, raised his revenue and earnings forecasts and price targets based on the report. Genovese had issued a July 14 report predicting strong results for Infinera.

"Bandwidth demand from telcos, cable MSOs and Internet content providers is not slowing down, and Infinera has a sustainable technology advantage in providing virtually unlimited pools of flexible bandwidth," wrote Genovese in a report this morning. "We think the company has many years left of strong runway for its 100+G optical products."

Genovese raised MKM's revenue forecasts and increased earnings-per-share estimates to 73 cents per share for 2015 and $1.08 for 2016. "We are also increasing our 12-month price target to $27 from $26, still based on [a multiple of] 25x our 2016 EPS estimate. Our current estimates do not include the Transmode acquisition, which should add 10 to 20 cents to 2016 earnings per share. We think there is a good likelihood the Transmode deal will close next month."

Infinera management said on Wednesday's conference call that it expects $210 million to $220 million in revenue for the next quarter. The consensus analyst expectation was for $206 million. The upside is contributing to the strength in the stock.

Photo by Koji Kawano on Flickr, cropped. CC2.0 license.