Technology Stocks

Ciena Corporation (NYSE:CIEN) A Pull Back Play That Keeps On Giving

Ciena Corporation (NYSE:CIEN) is once again climbing high, after a minor correction. The upward momentum has received a significant boost on the company reporting solid Q3 financial results. The company reported healthy financial results as the top line and bottom line surpassed consensus estimates.

Ciena Price Analysis

Pullbacks in the stock have in the recent past emerged as buy opportunities from where buyers have come in and continued to push the stock up. The stock is currently trading in a steep uptrend on strengthening investors’ confidence about the company’s growth metrics after the earnings beat.

The company’s sentiments in the market have also received a significant on the issuance of strong guidance that points to continued growth in 2019. As other stocks in the market have come under pressure, Ciena has continued to climb higher be it at the backdrop of pullbacks.


The stock is up by more than 30% for the year and looks set to continue climbing high heading into the New Year. After the recent spike higher, the stock faces immediate support at the $31 a share level on any pullbacks from record highs. A breach of the critical support level would open the door for the stock to plunge back to $28 a share, the next substantial support level.

Revenue and Earnings Growth

Revenue in the fourth quarter was up 20% to $899 million compared to $744.4 million reported a year earlier. Full-year revenue surged to $3.09 billion compared to $2.8 billion of fiscal 2017. Net income, on the other hand, came in at $81 million or $0.53 a share compared to a net income of$48.5 million or $0.32 a share reported a year earlier.

Gross margins expanded to 44.3% compared to 43.7% reported a year earlier. The company exited the 2018 fiscal year with $229.3 million in cash from operating activities compared to $234.9 million reported a year earlier

“The combination of our innovation strength, successful interception of market trends and sustained ability to take share and outperform the market, along with a thriving industry environment, gives us tremendous confidence in both the near and longer term outlook for our business,” said Gary B. Smith, president, and CEO, Ciena.


In line with the robust growth experienced in Q3, Ciena is projecting a 7% revenue growth for the coming year, which is slightly above consensus estimates of 6%. For the January quarter, the company remains confident of generating revenues in the range of $745 million and $775 million above consensus estimates of $730 million.

The fiber optic supplier continues to reap the benefits of inking strategic partnerships with tech giants. Revenue growth comes on the company diversifying its business through deals with the likes of Amazon, Microsoft, and Google. The tech giants continue to buy the company’s gear in numbers, to power their massive networks and data centers.

Ciena has emerged as a darling of Wall Street given its credentials when it comes to returning value to shareholders. The company repurchased $111 million worth of stock in 2018 as it sought to return maximum value to shareholders. In line with the drive, the company has also confirmed plans to purchase $500 million worth of shares going forward. The new repurchase program replaces the previous plan.

Bottom Line

Investors pushing Ciena up the charts does not come as a surprise. The company has continued to fire on all fronts when it comes to business operations and operational efficiency. Revenue and earnings growth underscore a company that is in a phase of robust growth. That said the stock looks set to continue powering high on strengthening investor confidence about long-term prospects.

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