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NEW YORK (TheStreet) -- Shares of Ciena (CIEN) - Get Ciena Corporation Report were gaining 2.2% to $19.91 Tuesday following a positive note from analyst firm Cowen.

In a note to investors, Cowen analyst Paul Silverstein said that Ciena is "highly likely to be selected as one of the two key suppliers for Verizon Communications's (VZ) - Get Verizon Communications Inc. Report looming 100Gbps metro optical build-out." Ciena could receive $200 million to $300 million over two years under such a deal, according to Barron's.

"Based on our industry checks, we expect Ciena to be awarded one of the two seats and to gain at least 50% of the looming award," Silverstein wrote. "To be clear, our checks indicate that Verizon has not selected vendors for this 100Gbps metro optical build-out. That said, our checks also indicate that Ciena currently is well in front of the pack, with one of Alcatel Lucent (ALU) , Coriant or Fujitsu likely to be selected as the other vendor."

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The analyst expects Verizon to make a formal selection by early 2015, with initial deployments starts later in the year.

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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CIEN's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 1979.66% to $73.85 million when compared to the same quarter last year. In addition, CIENA CORP has also vastly surpassed the industry average cash flow growth rate of -32.06%.
  • CIENA CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CIENA CORP continued to lose money by earning -$0.39 versus -$0.84 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus -$0.39).
  • The share price of CIENA CORP has not done very well: it is down 12.33% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Communications Equipment industry. The net income has significantly decreased by 213.4% when compared to the same quarter one year ago, falling from -$9.80 million to -$30.70 million.
  • You can view the full analysis from the report here: CIEN Ratings Report

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