Hold Telecom Supplier Ciena Corp.

Ciena Corp. (CIEN - Analyst Report) reported strong margins in the first half of FY 2008, and looks poised to maintain this throughout the year. Its FlexSelect products allow carriers to transition networks to carrier grade Ethernet, one of the fastest-growing technologies in telecommunications.

In order to expand its Ethernet offering from infrastructure throughout the network, including metro and customer premise locations, Ciena completed the acquisition of World Wide Packets. We therefore maintain a Hold rating on CIEN shares and lower our six-month price target to $31.50, given risks to the U.S. economy. We believe that Ciena will be successful in leveraging its new product portfolio.

Ciena is currently trading at 22.7x estimated 2008 EPS, in-line with the industry median. However, with economic uncertainty in 2008, telecom carriers could potentially curtail some of their spending in the second half of the year. We set a six-month price target to $31.50 which is based on P/E multiple of 21.6x our 2008 EPS estimate of $1.46, roughly inline with the industry mean and median.

Read the full analyst report on CIEN

Read the full analyst report on CIEN