Why Ciena (CIEN) Is Up Today

NEW YORK (TheStreet) -- Ciena (CIEN) was gaining 7.9% to $25.13 Friday following the announcement of a new partnership with Ericsson (ERIC) to integrate their respective products.

Ericsson was gaining 0.2% to $12.60.

The partnership will see Ericsson offer Ciena's Converged Packet Optical portfolio to its customers. Ciena's WaveLogic technology will also be integrated into Ericsson's IP portfolio as part of the agreement.

The goal of the collaboration is the lower the cost of ownership for wireless carrier and to help them roll out new services faster.

Must read: Closing a Short Put on Ciena

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, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

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

  • The revenue growth came in higher than the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 25.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 76.92% and other important driving factors, this stock has surged by 39.15% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • 42.87% is the gross profit margin for CIENA CORP which we consider to be strong. Regardless of CIEN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CIEN's net profit margin of -1.67% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to $3.55 million or 66.46% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CIEN Ratings Report

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