Ciena Analyst Predicts Gains From Strong Bandwidth Growth

Shares of Ciena Corporation CIEN climbed in early trading on Thursday.

Strong bandwidth growth should be a longer-term tailwind for the company, according to Stifel.

The Ciena Analyst: Ruben Roy initiated coverage of Ciena with Buy rating and a price target of $62.

The Ciena Thesis: Although the telecom and cable multiple-system operator (MSO) capex environment has weakened, particularly for the company’s large US customers AT&T Inc. T and Verizon Communications Inc. VZ, the capex of the cloud service provider (CSP) continues to increase, Roy said in the initiation note.

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“Much of the recent ICP spend has been focused on internal data center compute (AI) and associated networking/interconnect technology,” the analyst wrote. Ciena is poised to benefit from broader data center interconnect (DCI) upgrades, he added.

The growing complexity of network architecture should benefit Ciena, relative to peers, “given the company's leadership position in the 800Gbps market and with line of sight to its next-generation 1.6Tbps product launches next year,” Roy further wrote.

CIEN Price Action: Shares of Ciena had risen by 2.98% to $47.39 at the time of publication Thursday.

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