Ciena Needs More Chips To Pull Out Of The Dip

Bullishness on Ciena (NYSE:CIEN) has gotten me nowhere this year, as this large optical networking company has been hamstrung by its inability to secure the parts and components it needs to satisfy demand. While that demand has remained strong, and the company will head into 2023 with a strong backlog, the name seems to be a non-starter with the Street until the company can guide to meaningful sequential revenue growth and margin re-expansion.

Over the longer term, I still like Ciena’s leverage to service provider and webscale deployments, as well as opportunities to grow its routing and PON businesses, and I think the shares can deliver an annualized double-digit return. In the short term, though, it’s hard to see much upside beyond $50 unless and until the supply problems ease and management can guide to meaningful sequential revenue acceleration.

 

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Ciena Needs More Chips To Pull Out Of The Dip