Earnings estimates for the current and next fiscal for Ciena Corporation (CIEN - Free Report) have moved up 18.5% and 40.9%, respectively, in the past year, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option for investors at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Backed by a global scale of operations, diversification and innovation leadership, Ciena has a solid business model that aims to achieve sustainable growth. The company is augmenting its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to enable service providers to capitalize on the 5G boom.
The buyout of Packet Design has accelerated Ciena’s software strategy and contributed toward its long-term financial goal of growing the Blue Planet network automation platform and associated services business by 14-16% annually over the next three years. The expansion of the Blue Planet software business and network automation capabilities has provided the company with a competitive differentiation. The buyout has also helped the company extend its intelligent automation capabilities beyond Layer 0 to 2 into Layer 3, with critical new features to support a broader range of closed-loop automation and optimization use cases across multilayer, multivendor networks.
Ciena expects to deliver an improved operating margin and sustained EPS growth in fiscal 2020, driven by diligent execution of its plans. Its revenues are expected to increase from the rising demand for packet-optical transport and switching products, integrated network, and service management software. The company has been diversifying its footprint in data-center connectivity. This has enhanced its reach into a broader end-to-end optical and data-equipment market. It is increasingly investing in the data and optical fiber market to cash in on the tremendous growth opportunity presented by the rising bandwidth demand from network service providers.
Moreover, network upgrades by telecom carriers to meet increasing demand bode well for the company’s long-term growth prospects. Currently, Ciena is one of the leading suppliers of 40G and 100G optical transport technology. In addition, the company is making efforts to expand its Web Scale IT Architecture in the enterprise market by launching products like new chipsets, metro architecture and mobile backhaul solutions. Going forward, Fiber Deep technology represents a big opportunity for the company, driven by the strong adoption of its products among all major cable operators in the global market.
The stock has a long-term earnings growth expectation of 17.3%. It delivered a positive earnings surprise of 18.4%, on average, in the trailing four quarters, beating estimates thrice and missing once.
Other Key Picks
Some other similar-ranked stocks in the broader industry are Motorola Solutions, Inc. (MSI - Free Report) , Viasat Inc. (VSAT - Free Report) and Qualcomm Incorporated (QCOM - Free Report) .
Motorola has a long-term earnings growth expectation of 8.5%. It delivered a positive earnings surprise of 6.6%, on average, in the trailing four quarters.
Viasat surpassed earnings estimates on each occasion in the trailing four quarters, the average positive surprise being 402%.
Qualcomm has a long-term earnings growth expectation of 18.9%. It delivered a positive earnings surprise of 10%, on average, in the trailing four quarters.
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