B. Riley downgraded Ciena Corp to Neutral from Buy on Friday, saying the networking gear maker’s sharp stock rally has priced in much of its growth potential even as earnings and sales continue to exceed expectations.
The brokerage lifted its price target to $113 from $90 but said shares, up about 119% since April, now trade above its new target.
It cited risks tied to Ciena’s heavy exposure to service providers, which make up roughly half of revenue and have historically been volatile, and the potential threat from new optical networking technologies.
Ciena on Thursday reported fiscal third-quarter revenue of $1.22 billion, up 29% from a year earlier and ahead of Wall Street forecasts. Earnings of 67 cents per share also topped estimates. Cloud-related revenue nearly doubled, while demand from telecom operators remained solid.
The company guided current-quarter revenue of $1.24 billion to $1.32 billion, above consensus, and said it expects fiscal 2026 revenue to grow 17%, nearly double analysts’ expectations.
Management highlighted major new wins, including a data center infrastructure deal with a hyperscale customer and strong momentum in pluggable optics.
B. Riley raised its earnings estimates for Ciena to $2.47 a share in fiscal 2025 and $4.36 in 2026 but said the stock’s strong run leaves little room for further upside in the near term.
Source :
https://www.investing.com/news/stock-market-news/ciena-downgraded-as-stock-rally-priced-in-much-of-its-growth-potential-4227206
