Though up until the November market caused a plethora of shake-ups Ciena Corp. (CIEN) was rated a Buy by Zacks senior technology analyst Steve Biggs, CFA, he is continuing his Hold recommendation presently. To find out why, we looked into his most recent report and excerpted these details:
'Ciena Corp. has come a long way since its early stages of providing next generation networking equipment to emerging long-distance carriers. Today, its FlexSelect products allow carriers to transition networks to carrier grade Ethernet across the network. With a strong product offering and broad customer base, Ciena has grown revenue at a CAGR of 38% over the past three years.
'However, we believe that expectations are very high as a result, and investors were disappointed with projected revenue growth of 20% in 2008. Due to overly high expectations, we maintain a Hold rating on CIEN shares and cut our six-month price target to $30.50.
'Ciena is currently trading at 20.0x estimated 2008 EPS, which we believe is a very reasonable multiple given that it is a discount to its peer group. In order to become more positive on CIEN shares, we would like visibility into rising revenue in the second half of the year, or improved gross margins. Its $30.50 price target is based on a P/E multiple of 21.0x our 2008 EPS estimate of $1.45, a discount to the industry mean.'
Read the full analyst report on CIEN.
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