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Ciena (CIEN) Upgraded to Strong Buy on Strong Q2 Results
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On Jun 7, Zacks Investment Research upgraded Ciena Corp. (CIEN - Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The upgrade can primarily be attributed to the company’s impressive second-quarter fiscal 2017 results. Revenues totaled $707 million, up 10.3% year over year and ahead of the Zacks Consensus Estimate of $694 million.
Non-GAAP earnings (excluding stock-based compensation) of 45 cents increased 32.4% on a year-over-year basis driven by the robust top-line growth. Including stock-based compensation, earnings were 38 cents per share, which beat the Zacks Consensus Estimate of 29 cents.
We also note that shares of the company have outperformed the Zacks Fiber-Optics industry on a year-to-date basis. While the industry lost 1.1%, the stock gained 12.6%.
We believe that the impressive results and positive guidance will help the stock sustain this momentum in the rest of fiscal 2017.
Growth Catalysts
Accelerated software subscription and addition of new customers primarily backed the encouraging second-quarter results. Notably, the huge growth in the Asia-Pacific region was primarily driven by revenue contribution from India, which amounted to almost $100 million in the first half of fiscal 2017.
We believe the availability of Ciena’s new 400 gig per wavelength chip, Wavelogic AI, this summer will drive top-line growth further. The first-of-its-kind chip will also provide an early mover advantage against its peers like Cisco (CSCO - Free Report) and Juniper Networks (JNPR - Free Report) .
The company is poised for long-term growth with opportunities for developing 5G technologies for service providers and Fiber Deep cable MSO customers, given higher densification of networks.
The Zacks Consensus Estimates for 2017 has been steady at $1.36 for the last 30 days. For 2018, the estimate is currently pegged at $1.65, up 1.85% over the same time frame.
The long-term earnings growth rate for Applied Optoelectronics is projected to be 20%.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early.
Image: Bigstock
Ciena (CIEN) Upgraded to Strong Buy on Strong Q2 Results
On Jun 7, Zacks Investment Research upgraded Ciena Corp. (CIEN - Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The upgrade can primarily be attributed to the company’s impressive second-quarter fiscal 2017 results. Revenues totaled $707 million, up 10.3% year over year and ahead of the Zacks Consensus Estimate of $694 million.
Non-GAAP earnings (excluding stock-based compensation) of 45 cents increased 32.4% on a year-over-year basis driven by the robust top-line growth. Including stock-based compensation, earnings were 38 cents per share, which beat the Zacks Consensus Estimate of 29 cents.
We also note that shares of the company have outperformed the Zacks Fiber-Optics industry on a year-to-date basis. While the industry lost 1.1%, the stock gained 12.6%.
We believe that the impressive results and positive guidance will help the stock sustain this momentum in the rest of fiscal 2017.
Growth Catalysts
Accelerated software subscription and addition of new customers primarily backed the encouraging second-quarter results. Notably, the huge growth in the Asia-Pacific region was primarily driven by revenue contribution from India, which amounted to almost $100 million in the first half of fiscal 2017.
We believe the availability of Ciena’s new 400 gig per wavelength chip, Wavelogic AI, this summer will drive top-line growth further. The first-of-its-kind chip will also provide an early mover advantage against its peers like Cisco (CSCO - Free Report) and Juniper Networks (JNPR - Free Report) .
The company is poised for long-term growth with opportunities for developing 5G technologies for service providers and Fiber Deep cable MSO customers, given higher densification of networks.
Ciena Corporation Revenue (TTM)
Ciena Corporation Revenue (TTM) | Ciena Corporation Quote
Estimate Revision
The Zacks Consensus Estimates for 2017 has been steady at $1.36 for the last 30 days. For 2018, the estimate is currently pegged at $1.65, up 1.85% over the same time frame.
Key Pick
Another stock that can be considered by investors is Applied Optoelectronics, Inc. (AAOI - Free Report) , sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Applied Optoelectronics is projected to be 20%.
3 Stocks to Ride a 588% Revenue Explosion
At Zacks, we're mostly focused on short-term profit cycles, but the hottest of all technology mega-trends is starting to take hold...
By last year, it was already generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early.
See Zacks' Top 3 Stocks to Ride This Space >>