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 network equipment maker Ciena (NYSE: CIEN  ) popped 14% today after the company's quarterly results and outlook topped Wall Street expectations.

So what: The stock has stagnated in recent years on slow spending from telecom companies, but a surprise second-quarter adjusted profit of $0.02, coupled with upbeat guidance for the current quarter, reinforces recent optimism over rebounding demand. In fact, revenue grew 6.3% while gross margins expanded 300 basis points over the year-ago period, suggesting that Ciena's competitive position is strengthening, as well.

Now what: Management sees third-quarter revenue of $515 million-$545 million, well ahead of Wall Street's view of $509.5 million. "We have designed Ciena to take advantage of the fundamental shift in network architecture driven by changing end-user demands," said CEO Gary Smith. "These dynamics are creating new opportunities that we believe will enable us to continue making progress toward our long-term financial goals." With the stock now up more than 50% from its 52-week lows and trading at a 20-plus forward P/E, however, much of that progress might already be baked into the valuation.   

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

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


Read/Post Comments (0) | Recommend This Article (1)

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.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2475690, ~/Articles/ArticleHandler.aspx, 12/19/2014 3:13:38 PM

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