Ciena Analyst Turns Bullish, Says Demand Outlook Improving

Ciena Corporation CIEN is scheduled to report third-quarter results before the market opens on Sept. 5. 

The company’s quarterly results could come in-line with or better than expectations, according to Rosenblatt Securities.

The Analyst

Ryan Koontz upgraded Ciena from Neutral to Buy and raised the price target from $45 to $47.

The Thesis

Although hyperscale sales growth is decelerating, the negative impact on Ciena’s results may be offset by steady growth from U.S. and European carriers, Koontz said in a Thursday upgrade note. (See his track record here.) 

The analyst expects the company to report third-quarter results in-line with or ahead of expectations, while announcing fourth-quarter guidance in-line with expectations.

Supply chain checks indicate an improving demand outlook for the company, Koontz said, adding that Ciena has no exposure to Chinese sales and minimal supply chain exposure.

Despite these positives, the stock has declined 13% over the past month versus a 5% decline in the Nasdaq.

Rosenblatt raised its fourth-quarter revenue estimate from $940 million to $950 million.

The sell-side firm maintained its fiscal 2019 revenue estimate at $3.5 billion and increased the EPS estimate from $1.93 to $1.95.

Rosenblatt raised its revenue and EPS estimates for fiscal 2020 from $3.76 billion to $3.77 billion and from $2.45 to $2.50, respectively.

Price Action

Ciena shares were trading higher by 2.83% at $41.13 at the time of publication Thursday. 

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