Wednesday, May 27, 2015

Seeking Alpha: Ever-Volatile Ciena Doing Well In 100G

Optical equipment company Ciena (NYSE:CIEN) has been a pretty good stock for traders, as the market runs hot and cold on the shares in response to capex expectations from Verizon (NYSE:VZ) and AT&T (NYSE:T) and intermittent concerns about competition. Through this process, Ciena has done well for itself in the 100G space, and winning a spot at the table with Verizon for its 100G metro deployment was a solid, if widely expected, win. Looking ahead there should be plenty of 100G sales, as carrier deployments will go on for a while, and Ciena arguably doesn't get enough credit for its success with Web 2.0 companies like Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB).

Credit from the market is a tough thing to evaluate, though, and I don't believe the market is significantly undervaluing these shares today. Sustained double-digit FCF margins would support a fair value in the high $20's, but Ciena has never been able to do that and there are risks that the overall market growth will disappoint the bulls. Given those risks, a mid-$20's fair value is probably more realistic today but I'm favorably biased on this stock and I think Ciena could surprise with additional wins and better margin leverage.

The following link leads to the full article:
Ever-Volatile Ciena Doing Well In 100G

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