Shares of networking equipment maker Ciena Corp. closed slightly lower on Tuesday, even though the company received an outperform” rating, as Wall Street reacted to the companys fourth-quarter outlook.
Ciena stock closed down 2.06 percent, to $15.22, after executives said once again they expect a revenue jump of up to 5 percent. That puts potential sales for the quarter that will end Oct. 31 at between $390 million and $409 million. Analysts polled by Thomson Reuters expect to see $406.6 million in fourth-quarter revenue.
Still, Maryland-based Ciena, which now owns Nortels Metro Ethernet Networks (MEN) assets, received some good news. BMO Capital Markets initiated its coverage of Ciena this week with an outperform” rating and a price target of $20 because, analysts said service providers will keep buying equipment that will handle growing data capacity needs.
We believe Ciena is the best-positioned provider of optical transport and switching gear,” BMO analyst Tim Long wrote in a client memo. Although we expect carrier spending to remain relatively flat over the next several years, we believe Ciena can benefit from the need for carriers to lower costs while simultaneously handling data streams that are growing exponentially.”
Long added that buying Nortels MEN division has given Ciena the premier competitive position in the 40G/100G optical transport sector, which should blossom as of next year.