NEW YORK (TheStreet) -- Investors placing bets in the long term growth potential of telecommunications equipment makers such as Ciena (CIEN) and Juniper (JNPR) have to first hope that carrier spending from the likes of AT&T (T), Verizon (VZ) and Comcast (CMCSA) will return to their previous lofty levels.
Since that low period of $13.26 it has risen as high as 50% to $20.14 to where it sits today at just under $19. What's its real value? It seems investors have had a hard time justifying the lofty forward multiples absent sustainable growth momentum. The stock has moved in both directions by as much as 50%. Is there anything to be made of the indecisiveness? Should the drastic correction be interpreted as an overreaction or has the stock now approached its fair market value? That said, despite its recent drop from $36, the stock is far from being considered cheap as it yet trades at a price-to-earnings ratio of almost 70. Also there are increasing concerns about the competition. As noted, while Acme has a sizable lead in the session delivery market, no market leader maintains its lead forever -- particularly where it involves prominent rivals such as Cisco ( CSCO) which has the overall lead in network equipment and routing and switching technology. Not to be discounted are the technologies from other rivals such as F5 ( FFIV), Hewlett-Packard ( HPQ) and Riverbed ( RVBD) which are all capable of stealing some market share. These fears, coupled with weak carrier spending have caused analysts to revise their estimates lower not only for this year, but also for 2013.