Ciena Starting To See Some Rewards

Having written that Ciena (NASDAQ:CIEN) shares looked like an interesting trade earlier this year, I'm pleased to see the 25% move since late March - a performance that doubled the NASDAQ over that time, not to mention it outperformed comps like Infinera (NASDAQ:INFN), Cisco (NASDAQ:CSCO) and Nokia (NYSE:NOK). Better still, at least some of this outperformance is supported by actual improvements in the underlying business, with the last quarter (the company's fiscal third quarter) showing an acceleration in revenue back to double-digit growth along with meaningful improvements in non-GAAP margins.

Looking ahead, Ciena should really start to reap the benefits from Verizon's (NYSE:VZ) 100G optical metro build-out in calendar 2017, and web-scale customers continue to sign up for the company's Wavecenter datacenter interconnect. On the "but" side, Nokia and Huawei seem to have really stepped up their competitive efforts in Europe, and I remain concerned about the feast-then-famine nature of the business. In terms of buy-and-hold long-term value, Ciena isn't nearly so appealing anymore, but valuation and sentiment on these shares have historically been very tied to near-term earnings momentum, so more aggressive investors may want to let this one continue to play out in their portfolios.

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Ciena Starting To See Some Rewards