Viavi Solutions' (VIAV) fiscal Q3 earnings came in-line with expectations buoyed by some recovery in the network enablement segment but weaker than other business operating in the space, Morgan Stanley said in a note emailed Friday.

"While no cancellations, downsizing, or pullforward of deals seen to-date, tariffs incorporated in [purchase orders] may lead to potential deal slippage given time required to get signatures," Morgan Stanley said.

Viavi Solutions reported fiscal Q3 non-GAAP earnings of $0.15 per diluted share, compared with analysts' estimate of $0.12.

Net revenue was $284.8 million, slightly above the estimate of $282.1 million.

According to Morgan Stanley, further upside to the business was now dependent on "meaningful EPS revisions" which appeared limited given the tariff overhang.

The firm added that it remained "cautious" as service provider budgets did not have the same ability to absorb tariffs when compared to other customers.

Viavi Solutions is targeting fiscal Q4 non-GAAP EPS of $0.10 to $0.13 on net revenue of $278 million to $290 million. Analysts project EPS of $0.12 on revenue of $285.2 million.

Morgan Stanley reiterated its underweight rating on the stock and raised its price target to $8.60 from $8 previously.

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