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Ciena (CIEN)
NYSE:CIEN
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Ciena
(NYSE:CIEN)68Neutral
Positive Factors
AI Traffic Growth
Ciena benefits significantly from AI-related traffic growth, which is expected to continue for several years.
Cloud Traffic Dynamics
Ciena has substantial exposure to Cloud Providers, with more than 60% of revenue driven by Cloud traffic dynamics.
Negative Factors
Earnings Expectations
Ciena's better revenue growth and lower margin expectations are driving earnings estimates for FY25 lower relative to consensus heading into the print, and implying that investors at a bare minimum need to look out to FY26 to justify the valuation for the shares.
Ciena (CIEN) vs. S&P 500 (SPY)
Market Cap
$10.60B
Dividend YieldN/A
Average Volume (3M)2.77M
Price to Earnings (P/E)131.1
Beta (1Y)1.57
Revenue Growth-8.47%
EPS Growth-66.16%
CountryUS
Employees8,657
SectorTechnology
Sector Strength48
IndustryHardware & Equipment
Share Statistics
EPS (TTM)0.57
Shares Outstanding142,591,830
10 Day Avg. Volume2,612,765
30 Day Avg. Volume2,770,949
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.63
Price to Cash Flow (P/CF)7.60
P/FCF Ratio6.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$92.69Price Target Upside23.18% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Ciena Business Overview & Revenue Model
Company DescriptionCiena Corporation (CIEN) is a global provider of networking systems, services, and software that support the delivery and transport of voice, video, and data services. The company operates in the telecommunications industry, offering solutions for optical networking, routing and switching, network automation, and software-defined networking. Ciena's core products and services are aimed at enabling communication service providers, data center operators, and enterprises to build more adaptive networks that respond to dynamic changes in demand and technology.
How the Company Makes MoneyCiena makes money through the sale of its hardware and software products, as well as professional services. Its revenue streams are primarily derived from network hardware sales, which include optical transport and switching equipment. Additionally, Ciena generates income from software sales related to network management and automation, as well as from professional services such as consulting, design, and implementation support. Key factors contributing to its earnings include long-term contracts with major telecommunications companies and strategic partnerships that enhance its product offerings and market reach.
Ciena Financial Statement Overview
Summary
Ciena presents a stable financial position with strong cash flow and solid equity. The company faces some profitability challenges with declining margins and ROE, but the improved debt position and substantial cash reserves provide a buffer. Continued focus on operational efficiency could enhance profitability.Income Statement
Ciena's income statement shows stable revenue over the years with a slight decline in 2024. Gross profit margin remained strong at approximately 42.8% in 2024, but net profit margin decreased to 2.1% from 5.8% in 2023, indicating rising costs or other operational challenges. EBIT and EBITDA margins also declined, reflecting reduced operational efficiency.75
Positive
Balance Sheet
Ciena maintains a solid balance sheet with an equity ratio of 49.9% in 2024, demonstrating financial stability. The debt-to-equity ratio improved significantly to 0.08, indicating reduced leverage. Return on Equity (ROE) dropped to 3.0% from 8.9% in 2023, suggesting challenges in generating returns from equity.80
Positive
Cash Flow
Ciena's cash flow statement shows strong free cash flow growth in 2024, with free cash flow increasing to $514.5 million. The operating cash flow to net income ratio is high at approximately 6.13, indicating robust cash generation relative to net income. However, the previous period's free cash flow was significantly lower, reflecting potential volatility.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.01B | 4.39B | 3.63B | 3.62B | 3.53B | Gross Profit |
| 1.72B | 1.88B | 1.56B | 1.72B | 1.65B | EBIT |
| 166.62M | 357.55M | 222.81M | 495.36M | 486.96M | EBITDA |
| 350.35M | 527.03M | 397.43M | 618.48M | 646.17M | Net Income Common Stockholders |
| 83.96M | 254.83M | 152.90M | 500.20M | 361.29M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.25B | 1.12B | 1.15B | 1.60B | 1.24B | Total Assets |
| 5.64B | 5.60B | 5.07B | 4.87B | 4.18B | Total Debt |
| 237.20M | 1.66B | 1.13B | 737.48M | 763.74M | Net Debt |
| -697.66M | 646.55M | 135.02M | -685.07M | -324.89M | Total Liabilities |
| 2.83B | 2.75B | 2.36B | 1.85B | 1.67B | Stockholders Equity |
| 2.82B | 2.85B | 2.71B | 3.02B | 2.51B |
| Cash Flow | Free Cash Flow | |||
| 514.53M | 62.13M | -258.57M | 462.10M | 410.99M | Operating Cash Flow |
| 514.53M | 168.33M | -167.76M | 541.65M | 493.65M | Investing Cash Flow |
| -306.48M | -383.45M | -101.25M | -90.72M | -220.24M | Financing Cash Flow |
| -285.06M | 229.38M | -133.06M | -116.83M | -87.22M |
Ciena Technical Analysis
Negative
75.25
Price Trends
85.21
Negative
77.71
Negative
64.86
Positive
Market Momentum
-2.83
Positive
37.07
Neutral
19.08
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CIEN, the sentiment is Negative. The current price of 75.25 is below the 20-day moving average (MA) of 84.43, below the 50-day MA of 85.21, and above the 200-day MA of 64.86, indicating a neutral trend. The MACD of -2.83 indicates Positive momentum. The RSI at 37.07 is Neutral, neither overbought nor oversold. The STOCH value of 19.08 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CIEN.
Ciena Risk Analysis
Ciena disclosed 42 risk factors in its most recent earnings report. Ciena reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ciena Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $107.85B | 39.45 | 33.14% | ― | 19.50% | 34.64% | |
74 Outperform | $251.67B | 27.72 | 20.02% | 2.53% | -5.34% | -30.57% | |
68 Neutral | $10.60B | 131.07 | 2.96% | ― | -8.47% | -66.16% | |
60 Neutral | $11.97B | 41.77 | 6.21% | 2.45% | -8.82% | -10.01% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
45 Neutral | $1.57B | ― | -90.26% | ― | -12.12% | -469.62% | |
44 Neutral | $1.93B | ― | -152.77% | ― | -24.49% | -250.61% |
* Technology Sector Average
Performance Comparison
CIEN
Ciena
68.43
15.59
29.50%
CSCO
Cisco Systems
63.41
16.01
33.78%
EXTR
Extreme Networks
15.16
3.16
26.33%
INFN
Infinera
6.64
1.78
36.63%
JNPR
Juniper Networks
36.01
-0.45
-1.23%
ANET
Arista Networks
84.34
12.72
17.76%
Ciena Earnings Call Summary
Earnings Call Date: Dec 12, 2024 | % Change Since: 2.79% | Next Earnings Date: Mar 11, 2025
Earnings Call Sentiment Positive
Ciena's earnings call reflects a positive outlook with record-breaking revenue and strong growth in cloud and AI segments. However, the call also highlighted challenges in gross margin due to supply chain issues and inventory management. Despite these challenges, the company's confident in its future growth prospects.Highlights
Record Revenue for Q4
Ciena reported strong fiscal fourth quarter results with revenue of $1.12 billion, marking a significant achievement for the company.
WaveLogic 6 Extreme Launch
Ciena launched the WaveLogic 6 Extreme, becoming the only provider of 1.6 terabit capable coherent modems, further extending its technology leadership.
Growth in Cloud and AI Segment
Strong momentum seen in cloud and AI segments with major infrastructure projects by cloud providers, supporting the growth of AI and data traffic.
Strong Cash Flow and Share Repurchase
Ciena generated $349 million in cash from operations in Q4 and completed a $1 billion share repurchase program.
Positive Long-Term Revenue Growth Outlook
Ciena expects average annual revenue growth of 8% to 11% over the next three years, driven by investments in cloud and AI.
Lowlights
Lower Than Expected Gross Margin
Adjusted gross margin in Q4 was 41.6%, lower than expected due to a $39 million charge for excess and obsolescence in inventory.
Challenges in Supply Chain Management
Supply chain challenges impacted the ability to match demand with supply, contributing to higher than typical E&O charges.
Headcount and Operating Expense Concerns
Ciena reduced headcount due to earlier revenue guidance adjustments and anticipated increased operating expenses in FY25.
Company Guidance
In the Ciena Q4 2024 earnings call, the company provided robust guidance for fiscal year 2025, projecting revenue growth of 8% to 11%, driven by strong market dynamics, including cloud and AI trends. They reported Q4 revenue of $1.12 billion with a book-to-bill ratio above one for the second half of fiscal 2024, leading to a $2.1 billion backlog. The adjusted gross margin was 41.6%, affected by a $39 million charge for excess and obsolescence. Looking ahead, Ciena expects gross margins to range from 42% to 44% for fiscal 2025, with a focus on leveraging their industry-leading optical technology. They anticipate operating expenses to average between $350 million to $360 million per quarter. The company also announced a $1 billion share repurchase plan over the next three fiscal years, reflecting confidence in their long-term strategy and market positioning.Ciena Corporate Events
Executive/Board ChangesFinancial Disclosures
Ciena Updates Board, Bylaws, and Reports Financial Results
Neutral
Dec 12, 2024
Ciena announced changes in its Board of Directors with the retirement of Patrick H. Nettles and the appointment of Lawton W. Fitt as independent Chair. These changes accompany a review and amendment of Ciena’s bylaws, which aim to clarify procedural mechanics for stockholder nominations and proposals. Additionally, Ciena reported its fiscal fourth quarter 2024 financial results, showing a slight decline in revenue and net income compared to the previous year, but emphasized its technology leadership and potential for future growth driven by cloud and AI demands.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.