Needham analyst Alex Henderson maintained a Buy rating on Ciena (CIEN – Research Report) today and set a price target of $65.00.
Alex Henderson has given his Buy rating due to a combination of factors surrounding Ciena’s current position and future prospects. Despite the short-term challenges reflected by the significant decrease in service provider orders, he perceives these issues as temporary, related to inventory adjustments rather than a decrease in long-term demand. Henderson anticipates a recovery in gross margins and earnings per share as the inventory situation normalizes, projecting a rebound in the latter part of fiscal year 2024 and into fiscal year 2025. This expected turnaround is based on the assumption of an improvement in market conditions and a comparison with the currently weak financials, which may result in substantial growth.
Henderson’s confidence is also bolstered by the prospect of Ciena’s financial performance strengthening against a backdrop of easier comparisons in the future, along with a sharp recovery in earnings per share. Although acknowledging near-term headwinds and advising a cautious approach to investment timing, Henderson maintains a long-term positive outlook on Ciena’s stock. His endorsement suggests that, for investors with a longer time horizon, the present difficulties may present a buying opportunity ahead of anticipated future growth.
In another report released yesterday, Barclays also assigned a Buy rating to the stock with a $60.00 price target.
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Ciena (CIEN) Company Description:
Ciena Corp. engages in the provision of network and communication infrastructure. It operates through the following segments: Converged Packet Optical; Packet Networking; Optical Transport; and Software and Services. The Converged Packet Optical segment develops and sells optical processors, switching systems and operating system software. The Packet Networking segment includes service delivery switches, services aggregation switches, and ethernet packet configurations. The Optical Transport segment manufactures and trades optical transport systems, common photonic layer, data networking products, data center interconnection and virtual networks. The Software and Services segment provides wide area network controller, network functions virtualization platform, and software applications. The company was founded by Patrick H. Nettles in November 1992 and is headquartered in Hanover, MD.
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