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
No comments:
Post a Comment