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Here's Why Investors Should Consider Buying Ciena (CIEN)
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Ciena Corporation (CIEN - Free Report) appears to be a promising stock to add to the portfolio to tackle the current macroeconomic and geopolitical uncertainties and benefit from its healthy fundamentals and growth prospects.
Let’s look at the factors that make the stock an attractive pick:
Attractive Pricing: Wall Street is facing extreme volatility due to macroeconomic factors such as rising inflation and interest rate hikes by the Federal Reserve, increased crude oil prices and lingering supply-chain woes.
The abovementioned factors are taking a toll on major U.S. indices. In the past year, the S&P 500 has fallen 11.4%.
The stock is down 15% from its 52-week high level of $74.98 on Apr 4, 2022, making it relatively affordable for investors.
Robust Estimates: The Zacks Consensus Estimate for 2023 and 2024 earnings is pegged at $2.84 and $3.71, which indicates a year-over-year increase of 49.5% and 30.6%, respectively.
Also, revenues for 2023 and 2024 are estimated to be $4.41 billion and $4.70 billion, indicating year-over-year growth of 21.4% and 6.5%, respectively.
The company's first-quarter fiscal 2023 (ended Jan 28) adjusted earnings of 64 cents per share beat the Zacks Consensus Estimate of 36 cents. Earnings improved 36.2% year over year.
Quarterly total revenues were up 25% year over year to $1,056.5 million, owing to an improvement in supply-chain issues and strong demand. The top line surpassed the Zacks Consensus Estimate by 10.1%.
CIEN has a four-quarter average earnings surprise of 181.8%.
Upbeat Guidance: For fiscal 2023, the company expects revenue growth in the range of 20-22%, up from the earlier guided range of 16-18%.
Adjusted gross margin is estimated to be between 42% and 44%. The outlook is driven by strong demand and signs of supply-chain improvement.
Solid Business Model
CIEN is a leading provider of optical networking equipment, software and services. The company’s coherent optics solutions continue to benefit from increased network traffic, demand for bandwidth and the adoption of cloud architectures.
In the first fiscal quarter, the company added 13 new customers for WaveLogic 5e, increasing the overall customer count to more than 214. Also, the company has shipped approximately 60,000 WaveLogic 5e modems.
The company also has a share repurchase program in place. Ciena repurchased $500 million worth of shares in fiscal 2022. The company plans to repurchase shares worth $250 million in fiscal 2023.
Recent Developments
In March, the company announced that Colt Technology Services is leveraging its coherent technology to offer high-capacity services across long distances spanning more than 500 kms.
Colt will be using Ciena's 6500 Reconfigurable Line System, Waveserver 5 powered by WaveLogic 5 Extreme and Manage, Control and Plan domain controller to upgrade its network capacity.
Also, the company announced that its GeoMesh Extreme, leveraging Waveserver 5 powered by WaveLogic 5 Extreme, is being utilized by Asia Submarine-cable Express (ASE) to improve ASE’s design capacity.
Prior to that, the company unveiled WaveLogic 6, the latest generation of its WaveLogic technology, to tap the growing demand for increasing bandwidth and reducing energy usage to meet current and future network and business requirements.
Ciena has two new solutions with WaveLogic 6; WaveLogic 6 Extreme and WaveLogic 6 Nano. These new technologies are designed to cater to the high-capacity transport required by next-generation routing data paths and associated wholesale services.
A Few Headwinds
Apart from its solid fundamentals, the company is prone to several risks. The company operates in a highly competitive and capital-intensive communications networking and equipment business. This is likely to negatively impact the company’s performance.
Also, the company relies upon third-party contract manufacturers with facilities in Canada, Mexico, Thailand and the United States to perform a substantial portion of its supply chain activities. Uncertainty prevailing over global macroeconomic conditions continues to be a major headwind.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Perion Network (PERI - Free Report) and Pegasystems (PEGA - Free Report) , each presently sporting a Zacks Rank #1.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings has increased 11.5% in the past 60 days to $5.79 per share. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 16.9% in the past year.
The Zacks Consensus Estimate for Perion’s 2023 earnings has increased 16% in the past 60 days to $2.69 per share. The long-term earnings growth rate is anticipated to be 25%.
Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have increased 70.5% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has increased 101.5% in the past 60 days to $1.35 per share.
Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of the company have declined 43.1% in the past year.
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Here's Why Investors Should Consider Buying Ciena (CIEN)
Ciena Corporation (CIEN - Free Report) appears to be a promising stock to add to the portfolio to tackle the current macroeconomic and geopolitical uncertainties and benefit from its healthy fundamentals and growth prospects.
Let’s look at the factors that make the stock an attractive pick:
Attractive Pricing: Wall Street is facing extreme volatility due to macroeconomic factors such as rising inflation and interest rate hikes by the Federal Reserve, increased crude oil prices and lingering supply-chain woes.
The abovementioned factors are taking a toll on major U.S. indices. In the past year, the S&P 500 has fallen 11.4%.
The stock is down 15% from its 52-week high level of $74.98 on Apr 4, 2022, making it relatively affordable for investors.
Ciena Corporation Price
Ciena Corporation price | Ciena Corporation Quote
Solid Rank: CIEN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Robust Estimates: The Zacks Consensus Estimate for 2023 and 2024 earnings is pegged at $2.84 and $3.71, which indicates a year-over-year increase of 49.5% and 30.6%, respectively.
Also, revenues for 2023 and 2024 are estimated to be $4.41 billion and $4.70 billion, indicating year-over-year growth of 21.4% and 6.5%, respectively.
The company's first-quarter fiscal 2023 (ended Jan 28) adjusted earnings of 64 cents per share beat the Zacks Consensus Estimate of 36 cents. Earnings improved 36.2% year over year.
Quarterly total revenues were up 25% year over year to $1,056.5 million, owing to an improvement in supply-chain issues and strong demand. The top line surpassed the Zacks Consensus Estimate by 10.1%.
CIEN has a four-quarter average earnings surprise of 181.8%.
Upbeat Guidance: For fiscal 2023, the company expects revenue growth in the range of 20-22%, up from the earlier guided range of 16-18%.
Adjusted gross margin is estimated to be between 42% and 44%. The outlook is driven by strong demand and signs of supply-chain improvement.
Solid Business Model
CIEN is a leading provider of optical networking equipment, software and services. The company’s coherent optics solutions continue to benefit from increased network traffic, demand for bandwidth and the adoption of cloud architectures.
In the first fiscal quarter, the company added 13 new customers for WaveLogic 5e, increasing the overall customer count to more than 214. Also, the company has shipped approximately 60,000 WaveLogic 5e modems.
The company also has a share repurchase program in place. Ciena repurchased $500 million worth of shares in fiscal 2022. The company plans to repurchase shares worth $250 million in fiscal 2023.
Recent Developments
In March, the company announced that Colt Technology Services is leveraging its coherent technology to offer high-capacity services across long distances spanning more than 500 kms.
Colt will be using Ciena's 6500 Reconfigurable Line System, Waveserver 5 powered by WaveLogic 5 Extreme and Manage, Control and Plan domain controller to upgrade its network capacity.
Also, the company announced that its GeoMesh Extreme, leveraging Waveserver 5 powered by WaveLogic 5 Extreme, is being utilized by Asia Submarine-cable Express (ASE) to improve ASE’s design capacity.
Prior to that, the company unveiled WaveLogic 6, the latest generation of its WaveLogic technology, to tap the growing demand for increasing bandwidth and reducing energy usage to meet current and future network and business requirements.
Ciena has two new solutions with WaveLogic 6; WaveLogic 6 Extreme and WaveLogic 6 Nano. These new technologies are designed to cater to the high-capacity transport required by next-generation routing data paths and associated wholesale services.
A Few Headwinds
Apart from its solid fundamentals, the company is prone to several risks. The company operates in a highly competitive and capital-intensive communications networking and equipment business. This is likely to negatively impact the company’s performance.
Also, the company relies upon third-party contract manufacturers with facilities in Canada, Mexico, Thailand and the United States to perform a substantial portion of its supply chain activities. Uncertainty prevailing over global macroeconomic conditions continues to be a major headwind.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Perion Network (PERI - Free Report) and Pegasystems (PEGA - Free Report) , each presently sporting a Zacks Rank #1.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings has increased 11.5% in the past 60 days to $5.79 per share. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 16.9% in the past year.
The Zacks Consensus Estimate for Perion’s 2023 earnings has increased 16% in the past 60 days to $2.69 per share. The long-term earnings growth rate is anticipated to be 25%.
Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have increased 70.5% in the past year.
The Zacks Consensus Estimate for Pegasystems’ 2023 earnings has increased 101.5% in the past 60 days to $1.35 per share.
Pegasystems’ earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of the company have declined 43.1% in the past year.