Why Ciena Shares Surged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of networking equipment specialist Ciena (NYSE: CIEN  ) soared 16% today after its quarterly results topped Wall Street expectations.

So what: The stock had slumped going into today's first-quarter release on concerns over slowing demand, but a wide beat on the bottom line -- adjusted EPS of $0.12 versus Wall Street's view of a $0.14 loss -- is quickly easing those fears. While revenue of $453.1 million was largely in line with estimates, a 290 basis point gross margin gives investors plenty of good vibes over its ability to grow profitably going forward.

Now what: Management now sees second-quarter revenue of $465 million-$495 million, pretty much in line with the average analyst estimate of $480.2 million. "We have positioned Ciena to take advantage of the underlying market dynamics, which are increasingly aligned with our strategy and competitive strengths," said CEO Gary Smith. "We believe the combination of our technology and market share leadership as well as our strategic customer relationships will enable us to continue growing faster than the market." With the stock now up about 50% from its 52-week lows and trading at a 20-plus forward P/E, however, I'd wait for some of the excitement to fade before buying into that bullishness.

Interested in more info Ciena? Add it to your watchlist.

A fresh idea for 2013
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2299745, ~/Articles/ArticleHandler.aspx, 4/16/2014 1:30:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement