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Ciena Rides on Blue Planet Software, Carrier Network Upgrade
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Earnings estimates for the current and next fiscal for Ciena Corporation (CIEN - Free Report) have moved up 8.2% and 25.6%, respectively, in the past year, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Drivers
Backed by a global scale of operations, diversification and innovation leadership, Ciena has a solid business model that aims to achieve sustainable growth. The company is augmenting its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to enable service providers to capitalize on the 5G boom.
The buyout of Packet Design has accelerated Ciena’s software strategy and contributed to its long-term financial goal of growing the Blue Planet network automation platform and associated services business by 14-16% annually over the next three years. The expansion of the Blue Planet software business and its network automation capabilities has provided the company with competitive differentiation. The buyout has also helped the company extend its intelligent automation capabilities beyond Layer 0 to 2 into Layer 3, with critical new features to support a broader range of closed-loop automation and optimization use cases across multilayer, multivendor networks.
Ciena expects to deliver an improved operating margin and sustained EPS growth in fiscal 2020, driven by diligent execution of plans. Its revenues are expected to increase from the rising demand for packet-optical transport and switching products, integrated network, and the service management software. The company has been diversifying its footprint in data-center connectivity. This has enhanced its reach to a broader end-to-end optical and data-equipment market. It is increasingly investing in the data and optical fiber market to cash in on the tremendous growth opportunity presented by the rising bandwidth demand from network service providers.
Moreover, network upgrades by telecom carriers to meet increasing demand bode well for the company’s long-term growth prospects. Currently, Ciena is one of the leading suppliers of 40G and 100G optical transport technology. In addition, the company is making efforts to expand its Web Scale IT Architecture in the enterprise market by launching products like new chipsets, metro architecture and mobile backhaul solutions. Going forward, Fiber Deep technology represents a big opportunity for the company, driven by the strong adoption of its products among all major cable operators in the global market.
The stock has a long-term earnings growth expectation of 16.3%. It delivered a positive earnings surprise of 25.6%, on average, in the trailing four quarters, beating estimates thrice and missing once. With a VGM Score of A and a healthy liquidity position, this stock appears to be an enticing investment option for 2020.
Other Key Picks
Some other similar-ranked stocks in the broader industry are Ericsson (ERIC - Free Report) , InterDigital Inc. (IDCC - Free Report) and Juniper Networks Inc. (JNPR - Free Report) .
Ericsson has a long-term earnings growth expectation of 25.9%.
InterDigital has a long-term earnings growth expectation of 15%. It surpassed earnings estimates in the trailing four quarters, the average positive surprise being 99.5%.
Juniper has a long-term earnings growth expectation of 7.3%.
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Ciena Rides on Blue Planet Software, Carrier Network Upgrade
Earnings estimates for the current and next fiscal for Ciena Corporation (CIEN - Free Report) have moved up 8.2% and 25.6%, respectively, in the past year, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Drivers
Backed by a global scale of operations, diversification and innovation leadership, Ciena has a solid business model that aims to achieve sustainable growth. The company is augmenting its Packet Networking portfolio with new Adaptive IP capabilities, coherent optics and purpose-built hardware platforms to enable service providers to capitalize on the 5G boom.
The buyout of Packet Design has accelerated Ciena’s software strategy and contributed to its long-term financial goal of growing the Blue Planet network automation platform and associated services business by 14-16% annually over the next three years. The expansion of the Blue Planet software business and its network automation capabilities has provided the company with competitive differentiation. The buyout has also helped the company extend its intelligent automation capabilities beyond Layer 0 to 2 into Layer 3, with critical new features to support a broader range of closed-loop automation and optimization use cases across multilayer, multivendor networks.
Ciena expects to deliver an improved operating margin and sustained EPS growth in fiscal 2020, driven by diligent execution of plans. Its revenues are expected to increase from the rising demand for packet-optical transport and switching products, integrated network, and the service management software. The company has been diversifying its footprint in data-center connectivity. This has enhanced its reach to a broader end-to-end optical and data-equipment market. It is increasingly investing in the data and optical fiber market to cash in on the tremendous growth opportunity presented by the rising bandwidth demand from network service providers.
Moreover, network upgrades by telecom carriers to meet increasing demand bode well for the company’s long-term growth prospects. Currently, Ciena is one of the leading suppliers of 40G and 100G optical transport technology. In addition, the company is making efforts to expand its Web Scale IT Architecture in the enterprise market by launching products like new chipsets, metro architecture and mobile backhaul solutions. Going forward, Fiber Deep technology represents a big opportunity for the company, driven by the strong adoption of its products among all major cable operators in the global market.
The stock has a long-term earnings growth expectation of 16.3%. It delivered a positive earnings surprise of 25.6%, on average, in the trailing four quarters, beating estimates thrice and missing once. With a VGM Score of A and a healthy liquidity position, this stock appears to be an enticing investment option for 2020.
Other Key Picks
Some other similar-ranked stocks in the broader industry are Ericsson (ERIC - Free Report) , InterDigital Inc. (IDCC - Free Report) and Juniper Networks Inc. (JNPR - Free Report) .
Ericsson has a long-term earnings growth expectation of 25.9%.
InterDigital has a long-term earnings growth expectation of 15%. It surpassed earnings estimates in the trailing four quarters, the average positive surprise being 99.5%.
Juniper has a long-term earnings growth expectation of 7.3%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>