NEW YORK (TheStreet) -- Shares of Ciena (CIEN) - Get Report fell along with other telecommunications equipment and component stocks in morning trading Monday after AT&T T set a 2015 capital expenditure budget of $18 billion, down from $21 billion in 2014 and down from a prior forecast of $20 billion.
Ciena and other telecom equipment and component suppliers fell in the wake of the news. The group had previously suffered from AT&T's weak 2014 wireline capital expenditure.
RBC Capital Markets RBC also cut its price target on Ciena on Monday to $16 from $18 and maintained its "sector perform" rating.
Ciena stock was down 5.84% $15.65 at 11:15 a.m.
Separately, TheStreet Ratings team rates CIENA CORP as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CIENA CORP (CIEN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CIENA CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, CIENA CORP continued to lose money by earning -$0.84 versus -$1.46 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus -$0.84).
- 46.07% is the gross profit margin for CIENA CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CIEN's net profit margin of 2.67% significantly trails the industry average.
- CIEN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.14%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: CIEN Ratings Report