Communication infrastructure company Ciena (NYSE:CIEN) may not be the most well-known company, but its stock is drawing interest. In fact, it’s up over 4% in Wednesday afternoon’s trading, thanks to a new report from Morgan Stanley, which pointed out the significant upside potential found therein.
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Morgan Stanley, via analyst Meta Marshall, found that Ciena was now operating in a “derisked” environment for its FY 2024. In fact, based on the second quarter results recently released, Ciena’s overall business model is “more achievable,” Marshall noted, and topped it off by noting, “…we would be buyers ahead of recovery.”
Marshall also looks for a likely return of normalized inventory, improvements in Ciena’s share of the cloud market, and the rising tide of Ciena’s upcoming WaveLogic 6 release. Granted, any or all of these could fall flat, and it’s a safe bet that any recovery would be gradual, Marshall points out. But the headwinds Ciena faced are coming to a likely conclusion.
It’s worth noting that, so far, Marshall has enjoyed a 90% success rate on CIEN stock, with an average return of 14.55% per rating.
A Big New Cable Play
Meanwhile, Ciena made advances in the cable market. No, not the television one: the trans-Pacific submarine cable market. Ciena recently made a deal with Seren Juno Network, which runs JUNO, the largest trans-Pacific submarine cable, to put its GeoMesh Extreme system to work in JUNO’s operations to support the growing need for that connectivity.
GeoMesh Extreme—which runs on the back of WaveLogic 6—works as an end-to-end network architecture structure and gives network operators a range of new options to work with. And if this keeps up, any concerns about WaveLogic 6 not pulling its weight should prove moot.
Is Ciena a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on CIEN stock based on eight Buys, two Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 12.88% rally in its share price over the past year, the average CIEN price target of $55 per share implies 15.11% upside potential.
