Optical networking equipment vendor Ciena (NYSE:CIEN) has had a rough go of it over the last year, due in no small part to a slowdown in spending across its customer base (and large service providers like AT&T (NYSE:T) and Verizon (NYSE:VZ) in particular). This sort of cyclicality has long been a part of the model, but always manages to surprise and disappoint the Street when it reappears. Fortunately, Ciena is on the tail end of the slowdown, and looks poised to deliver improving revenue growth and margins over the next couple of years.
Up around 25% since my last update for Seeking Alpha, Ciena has lagged the NASDAQ, as well as other comps like Infinera (NASDAQ:INFN) and Cisco (NASDAQ:CSCO), and suppliers like NeoPhotonics (NYSE:NPTN). I expect revenue to reaccelerate by close to 10% next fiscal year, though, and rise again at a mid-to-high single-digit rate the year after, with around 150bp of operating margin improvement. Longer term, I think Ciena can generate mid-single-digit revenue growth that can support a double-digit annualized return from here.
Read the full article at Seeking Alpha:
Ciena Offers Attractive Upside Ahead Of A Reacceleration In Network Spending
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