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Ciena Shares Up 55.4% in 3 Months: What's Driving the Rally?
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Shares of Ciena Corporation (CIEN - Free Report) have surged 55.4% compared with 55.3% growth of the industry in the past three months. The stock currently carries a Zacks Rank #2 (Buy) and a VGM Score of A.
The Hanover, MD-based networking systems, services and software company topped earnings estimates thrice in the last four quarters and missed the same in the remaining quarter. It has a trailing four-quarter positive earnings surprise of 25.6%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 13.6% upward in the past 30 days. Ciena has a long-term earnings growth expectation of 16%.
What Works for Ciena
The fundamental demand drivers of Ciena’s business, including increased network traffic, demand for bandwidth and the adoption of cloud architectures remain strong. The company possesses the largest optical R&D investment capacity in the industry which enables it to deliver leading innovation with the best time to market. It has a world-class specialized sales force that is focused on customers and drives toward opportunities.
Ciena continues to benefit from diversification across customer segments and regions combined with its technology leadership, including the 5th-generation 800-gig WaveLogic modem. The company added several new products and capabilities to its 5G Network Solutions aimed at reducing network complexity and fueling operators’ migration from 4G to 5G.
The company is augmenting its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to help service providers capitalize on the next-generation of wireless connectivity, 5G. Further, the acquisition of Packet Design has accelerated Ciena’s software strategy and contributed to growth of 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 its network automation capabilities has provided the company with competitive differentiation. The buyout also helped Ciena to extend its intelligent automation capabilities beyond Layer 0 to 2 into Layer 3, with new features to support a broader range of closed-loop automation and optimization use cases across multilayer, multivendor networks.
Upbeat Fiscal Q2 Performance
Ciena reported healthy second-quarter fiscal 2020 results (ended May 2, 2020), with the top and the bottom line beating the Zacks Consensus Estimate. It delivered industry-leading financial performance despite uncertainties resulting from the COVID-19 pandemic. This was backed by Ciena’s strategy that hinges around innovation, diversification and global scale, leading to a resilient business.
Total revenues increased 3.4% year over year to $894.1 million, supported by higher product sales. Ciena had one 10%-plus customer in the quarter, which contributed 12% to revenues. Net income (GAAP basis) was $91.7 million or 59 cents per share compared with $52.7 million or 33 cents per share in the prior-year quarter. The improvement was primarily driven by higher operating income.
Ooma has a trailing four-quarter positive earnings surprise of 228.2%, on average.
Acacia has a trailing four-quarter positive earnings surprise of 17.7%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.
Chegg has a trailing four-quarter positive earnings surprise of 49.9%, on average.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Ciena Shares Up 55.4% in 3 Months: What's Driving the Rally?
Shares of Ciena Corporation (CIEN - Free Report) have surged 55.4% compared with 55.3% growth of the industry in the past three months. The stock currently carries a Zacks Rank #2 (Buy) and a VGM Score of A.
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The Hanover, MD-based networking systems, services and software company topped earnings estimates thrice in the last four quarters and missed the same in the remaining quarter. It has a trailing four-quarter positive earnings surprise of 25.6%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 13.6% upward in the past 30 days. Ciena has a long-term earnings growth expectation of 16%.
What Works for Ciena
The fundamental demand drivers of Ciena’s business, including increased network traffic, demand for bandwidth and the adoption of cloud architectures remain strong. The company possesses the largest optical R&D investment capacity in the industry which enables it to deliver leading innovation with the best time to market. It has a world-class specialized sales force that is focused on customers and drives toward opportunities.
Ciena continues to benefit from diversification across customer segments and regions combined with its technology leadership, including the 5th-generation 800-gig WaveLogic modem. The company added several new products and capabilities to its 5G Network Solutions aimed at reducing network complexity and fueling operators’ migration from 4G to 5G.
The company is augmenting its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to help service providers capitalize on the next-generation of wireless connectivity, 5G. Further, the acquisition of Packet Design has accelerated Ciena’s software strategy and contributed to growth of 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 its network automation capabilities has provided the company with competitive differentiation. The buyout also helped Ciena to extend its intelligent automation capabilities beyond Layer 0 to 2 into Layer 3, with new features to support a broader range of closed-loop automation and optimization use cases across multilayer, multivendor networks.
Upbeat Fiscal Q2 Performance
Ciena reported healthy second-quarter fiscal 2020 results (ended May 2, 2020), with the top and the bottom line beating the Zacks Consensus Estimate. It delivered industry-leading financial performance despite uncertainties resulting from the COVID-19 pandemic. This was backed by Ciena’s strategy that hinges around innovation, diversification and global scale, leading to a resilient business.
Total revenues increased 3.4% year over year to $894.1 million, supported by higher product sales. Ciena had one 10%-plus customer in the quarter, which contributed 12% to revenues. Net income (GAAP basis) was $91.7 million or 59 cents per share compared with $52.7 million or 33 cents per share in the prior-year quarter. The improvement was primarily driven by higher operating income.
Other Decent Choices
Some other top-ranked stocks in the broader industry are Ooma, Inc. (OOMA - Free Report) , Acacia Communications, Inc. and Chegg, Inc. (CHGG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ooma has a trailing four-quarter positive earnings surprise of 228.2%, on average.
Acacia has a trailing four-quarter positive earnings surprise of 17.7%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarters.
Chegg has a trailing four-quarter positive earnings surprise of 49.9%, on average.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>