Ciena Earns an Ugrade at Evercore
Evercore ISI analysts upgraded Ciena (NYSE:CIEN) to Outperform from In Line in a note Friday, raising their price target to $57 from $52 per share.
The analysts expressed to investors that Ciena is considered a high-value asset available at a reduced price. The upgrade to Outperform is based on the belief that Ciena's recent earnings report has effectively adjusted market expectations, setting the stage for the company to outperform and potentially increase its forecasts during the fiscal year 2024.
The analysts anticipate that growth in cloud and Indian markets could compensate for any potential weaknesses in the North American service provider segment. This could lead to a possible 5% revenue growth in fiscal year 2024, surpassing the current guidance of 1-4%.
Additionally, they see a chance for a gross margin improvement of about 200 basis points, aided by a better product mix and reduced supply chain costs, compared to the company's forecast of around 45% gross margin in fiscal 2024.
| Symbol | Price | %chg |
|---|---|---|
| SUPR.JK | 43875 | 0 |
| 178320.KQ | 24800 | 0 |
| 4333.HK | 250 | 0 |
| KETR.JK | 208 | 0 |
CIENA Shares Fall After JPMorgan Cuts Price Target
CIENA (NYSE:CIEN) shares fell more than 2% pre-market today after JPMorgan analysts reduced the price target for the company to $60 from $67, while maintaining an Overweight rating.
The analysts adjusted the forecasts for Ciena ahead of the earnings report in the first week of June. Recent discussions with optical equipment vendors at the 52nd Annual TMC Conference revealed a weak recovery in Telecom service provider orders and demand, delaying expectations of a recovery to late 2024 or early 2025. Despite Ciena already lowering its revenue expectations for this year, reaching the mid-point of the full-year revenue guidance of a 5% decline will require a sequential revenue increase from the second quarter's trough levels.
However, with the industry consensus indicating a slower recovery in the Telecom sector, the analysts are more cautious about this ramp-up.
The revised forecast now anticipates an 8% year-over-year revenue decline, with full-year revenue likely to hit the lower end of the $4.0-$4.3 billion guidance. Nevertheless, the second quarter is expected to be the lowest point in terms of revenue, with subsequent quarters showing improvement driven by increasing Cloud orders. This is supported by better Cloud order reports from Juniper and Infinera. The growing momentum of Cloud orders and the eventual cyclical recovery in Telecom are expected to return Ciena to its long-term revenue growth by fiscal 2025, especially considering the expanded Total Addressable Market (TAM) related to Switching & Routing and Access parts of the network.
As the company moves past the trough quarter, the EPS leverage on revenue recovery becomes significant. Ciena is expected to exit fiscal 2024 with a high earnings run-rate and expand earnings by over 20% in both 2025 and 2026.
Ciena Shares Rise on Q4 Beat
Shares of Ciena (NYSE:CIEN) experienced a 2% increase intra-day today after the company reported fourth-quarter results that surpassed expectations, attributed to strong performance from cloud customers.
Ciena's revenue saw a 21% rise, reaching $1.13 billion and surpassing the anticipated $1.1 billion. The adjusted earnings per share (EPS) were $0.75, exceeding the expected $0.69 and showing an increase from $0.61 in the previous year.
Gary Smith, President and CEO of Ciena, remarked on the company's performance stating that the fiscal fourth quarter exhibited strong results, largely driven by increasing demand from cloud provider customers. This year, the company achieved a significant 21% growth in revenue, greatly expanding its market share and reinforcing its leadership position in the industry. As Ciena continues to pursue its strategy of enhancing its market leadership in optical solutions and expanding its presence in the routing and switching sectors, it expects to maintain a trajectory of revenue growth and further gains in market share.
Ciena Shares Rise on Q4 Beat
Shares of Ciena (NYSE:CIEN) experienced a 2% increase intra-day today after the company reported fourth-quarter results that surpassed expectations, attributed to strong performance from cloud customers.
Ciena's revenue saw a 21% rise, reaching $1.13 billion and surpassing the anticipated $1.1 billion. The adjusted earnings per share (EPS) were $0.75, exceeding the expected $0.69 and showing an increase from $0.61 in the previous year.
Gary Smith, President and CEO of Ciena, remarked on the company's performance stating that the fiscal fourth quarter exhibited strong results, largely driven by increasing demand from cloud provider customers. This year, the company achieved a significant 21% growth in revenue, greatly expanding its market share and reinforcing its leadership position in the industry. As Ciena continues to pursue its strategy of enhancing its market leadership in optical solutions and expanding its presence in the routing and switching sectors, it expects to maintain a trajectory of revenue growth and further gains in market share.
