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Ciena Eyes 30% Revenue Growth in FY27: Can Strong Demand Sustain It?
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Key Takeaways
Ciena projects fiscal 2027 revenues of $8.3-$8.4 billion, indicating at least 30% year-over-year growth.
CIEN's backlog was $8.5 billion in Q3 and is expected to exceed $10 billion by fiscal 2026-end.
Ciena expects Hyper-Rail to generate several hundred million dollars in fiscal 2027 revenues.
Ciena Corporation (CIEN - Free Report) expects robust revenue growth in fiscal 2027, supported by accelerating demand for optical connectivity, expanding AI infrastructure investments and strong customer orders. The company anticipates revenues to grow at least 30% year over year to $8.3-$8.4 billion, with potential upside depending on supply availability. Management expects fiscal 2027 to mark another record year, reflecting continued demand across optical networking and data center connectivity markets.
Ciena's third-quarter fiscal 2026 revenues were a record $1.67 billion, increasing 37% year over year and reaching the upper end of management's guidance. Combined optical networks revenues, including interconnects, grew more than 45%, supported by growth exceeding 55% in both RLS and Waveserver systems. Interconnects revenues more than doubled, while direct cloud provider revenues increased more than 80% year over year.
Strong order momentum also contributed to an $800 million sequential increase in backlog to $8.5 billion at the end of the third quarter. With orders accelerating, Ciena expects its backlog to exceed $10 billion by fiscal 2026-end. Management indicated that the backlog extends into fiscal 2028, with most of the anticipated year-end backlog carrying customer-requested delivery dates in fiscal 2027.
For the fourth quarter of fiscal 2026, Ciena projects revenues of $1.75 billion, plus or minus $50 million. The company raised its full-year revenue guidance midpoint by $120 million to $6.42 billion, representing approximately 35% annual growth.
Ciena expects fiscal 2027 adjusted gross margins of at least 45-46% and adjusted operating margins of 25-27%. The company has secured long-term agreements for critical components through 2029 to support growing customer demand. Its next-generation Hyper-Rail platform is expected to generate several hundred million dollars in revenues during fiscal 2027.
Management believes that additional supply capacity could support revenues beyond its preliminary fiscal 2027 outlook, while sustained customer demand and expanding network infrastructure investments continue to underpin its growth expectations.
Taking a Look at CIEN’s Competitors
Corning Incorporated (GLW - Free Report) reported strong third-quarter 2026 results, with core revenues increasing 19% year over year to $5.08 billion, surpassing the Zacks Consensus Estimate. Optical Communications revenues surged 44% to $2.38 billion, driven by robust AI infrastructure demand. Enterprise Networks sales jumped 84%, while Solar revenues grew 37% to $436 million. However, Glass Innovations revenues declined 3% to $1.51 billion. For the fourth quarter, management expects core revenues of $5.2-$5.3 billion, implying approximately 19% growth. Under its upgraded Springboard Plan, Corning targets a $30 billion annualized sales run rate by 2028 and $40 billion by 2030.
Cisco Systems, Inc. (CSCO - Free Report) is benefiting from strong demand for networking solutions, driven by AI infrastructure investments, campus modernization and data center upgrades. Networking revenues surged 28% year over year in fourth-quarter fiscal 2026, supported by robust AI infrastructure demand. Security revenues increased 14%, reflecting growing adoption of newer security offerings and improving Splunk trends. Collaboration revenues advanced 12%, while Observability revenues rose 6%. The company expects continued revenue growth in fiscal 2027, supported by rising hyperscaler AI infrastructure revenues and recovering security demand. However, a hardware-heavy sales mix, sluggish services growth and intense competition remain challenges to sustained revenue expansion.
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Ciena Eyes 30% Revenue Growth in FY27: Can Strong Demand Sustain It?
Key Takeaways
Ciena Corporation (CIEN - Free Report) expects robust revenue growth in fiscal 2027, supported by accelerating demand for optical connectivity, expanding AI infrastructure investments and strong customer orders. The company anticipates revenues to grow at least 30% year over year to $8.3-$8.4 billion, with potential upside depending on supply availability. Management expects fiscal 2027 to mark another record year, reflecting continued demand across optical networking and data center connectivity markets.
Ciena's third-quarter fiscal 2026 revenues were a record $1.67 billion, increasing 37% year over year and reaching the upper end of management's guidance. Combined optical networks revenues, including interconnects, grew more than 45%, supported by growth exceeding 55% in both RLS and Waveserver systems. Interconnects revenues more than doubled, while direct cloud provider revenues increased more than 80% year over year.
Strong order momentum also contributed to an $800 million sequential increase in backlog to $8.5 billion at the end of the third quarter. With orders accelerating, Ciena expects its backlog to exceed $10 billion by fiscal 2026-end. Management indicated that the backlog extends into fiscal 2028, with most of the anticipated year-end backlog carrying customer-requested delivery dates in fiscal 2027.
For the fourth quarter of fiscal 2026, Ciena projects revenues of $1.75 billion, plus or minus $50 million. The company raised its full-year revenue guidance midpoint by $120 million to $6.42 billion, representing approximately 35% annual growth.
Ciena expects fiscal 2027 adjusted gross margins of at least 45-46% and adjusted operating margins of 25-27%. The company has secured long-term agreements for critical components through 2029 to support growing customer demand. Its next-generation Hyper-Rail platform is expected to generate several hundred million dollars in revenues during fiscal 2027.
Management believes that additional supply capacity could support revenues beyond its preliminary fiscal 2027 outlook, while sustained customer demand and expanding network infrastructure investments continue to underpin its growth expectations.
Taking a Look at CIEN’s Competitors
Corning Incorporated (GLW - Free Report) reported strong third-quarter 2026 results, with core revenues increasing 19% year over year to $5.08 billion, surpassing the Zacks Consensus Estimate. Optical Communications revenues surged 44% to $2.38 billion, driven by robust AI infrastructure demand. Enterprise Networks sales jumped 84%, while Solar revenues grew 37% to $436 million. However, Glass Innovations revenues declined 3% to $1.51 billion. For the fourth quarter, management expects core revenues of $5.2-$5.3 billion, implying approximately 19% growth. Under its upgraded Springboard Plan, Corning targets a $30 billion annualized sales run rate by 2028 and $40 billion by 2030.
Cisco Systems, Inc. (CSCO - Free Report) is benefiting from strong demand for networking solutions, driven by AI infrastructure investments, campus modernization and data center upgrades. Networking revenues surged 28% year over year in fourth-quarter fiscal 2026, supported by robust AI infrastructure demand. Security revenues increased 14%, reflecting growing adoption of newer security offerings and improving Splunk trends. Collaboration revenues advanced 12%, while Observability revenues rose 6%. The company expects continued revenue growth in fiscal 2027, supported by rising hyperscaler AI infrastructure revenues and recovering security demand. However, a hardware-heavy sales mix, sluggish services growth and intense competition remain challenges to sustained revenue expansion.
CIEN Price Performance, Valuation and Estimates
Shares of CIEN have gained 15.9% in the past year compared with the Communications - Components industry’s surge of 56.4%.
Image Source: Zacks Investment Research
CIEN trades at a forward 12-month price-to-earnings (P/E) ratio of 31.91, above the industry’s 22.92.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CIEN’s earnings for fiscal 2026 has been revised marginally upward over the past 60 days.
Image Source: Zacks Investment Research
Ciena currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.