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Ban on U.S. companies selling to China’s ZTE could really bite this stock

It’s never good when you’re suddenly banned from selling to a major customer.

That’s the position Acacia Communications Inc. ACIA, +3.12% is in after the U.S. Commerce Department said it would prohibit American companies from supplying components to Chinese hardware firm ZTE Corp. 000063, +0.35% for seven years. Acacia shares dropped 36% Monday following the report of the ban, which stems from ZTE’s past violation of Iran sanctions and its refusal to punish involved employees as it had promised.

The ban is a clear “negative” for Acacia, according to MKM Partners analyst Michael Genovese, who has a neutral rating on the stock.

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