Ciena (CIEN) Stock Advances After Analyst Action

NEW YORK (TheStreet) -- Shares of Ciena Corp. (CIEN) are higher by 1.18% to $23.18 after MKM Partners reiterated its "buy" rating and increased its price target to $27 from $25 for the Hanover, MD-based supplier of telecommunications networking equipment.

Demand for 100G optical capacity is strong and broad-based across Internet, Cable and Tier 2 carrier customers, resulting in MKM Partners increasing its fiscal 2015 revenue estimate to $2.44 billion from $2.41 billion.

MKM's earnings per share estimate was increased to $1.10 from $1.04.

"We are raising our estimates and increasing our price target to $27 (from $25) following the May 4 positive pre-announcement and before the full earnings report on June 4," said MKM analyst Michael Genovese.

Additionally, Ciena is also seeing good growth in Europe from better distribution, according to MKM.

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 good cash flow from operations, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."

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

  • Net operating cash flow has significantly increased by 159.57% to $22.14 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 -73.22%.
  • 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. Regardless of the strong results of the gross profit margin, the net profit margin of -3.54% is in-line with the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • CIEN, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has exceeded that of the Communications Equipment industry average, but is less than that of the S&P 500. The net income has decreased by 17.8% when compared to the same quarter one year ago, dropping from -$15.94 million to -$18.78 million.
  • You can view the full analysis from the report here: CIEN Ratings Report

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