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Technology Stocks : Ciena (CIEN)
CIEN 53.46+1.0%Oct 21 4:00 PM EDT

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From: FJB3/5/2018 7:20:50 PM
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Ciena FYQ1 On Tap: Street Looks to Cloud, 5G To Bolster Soft Telco Environment

By Tiernan Ray
March 5, 2018 6:26 p.m. ET

Fiber-optic networking giant Ciena ( CIEN) is set to report fiscal Q1 results tomorrow morning, before the opening bell, and the Street has been tuning up its models for the company.

The average estimate on the Street for the January-ending three-month period is for $642 million in revenue and 12 cents per share in net income.

For the forecast, the current consensus is $721 million and 27 cents per share.

Dougherty & Co.’s Catharine Trebnick, who has a Buy on the stock, and a $25 price target, is expecting results basically in line with that consensus. She points out this is a “seasonally soft quarter,” which means careers spending is “trimmed back due to the holidays."

Her own field research, writes Trebnick, “indicates the company saw continued order strength in the metro and subsea verticals during the period."

Also, announcements last week at the Mobile World Congress in Barcelona by carriers rolling out 5G networks later this year are among factors that will contribute to a stronger half of this fiscal year, she expects:
We see improving trends for Ciena in the second half of 2018: (1) Carrier capex is up Y/Y in the US and we view commitments to commercial launch of 5G from both Verizon and AT&T as a strong tailwind for Ciena. CenturyLink is rebidding their long haul network (providing another opportunity to improve their footprint within the carrier). (2) DCI opportunities, and (3) Subsea deployments are likely to drive FY'18 revenue ahead of management's conservative guide in the range of 5% - 7% and industry outlook. We expect the company will continue to gain share within the carrier, DCI, and subsea segments due to healthy tailwinds from 5G implementations across the globe and public cloud builds.William Blair’s Dmitry Netis, who has an Outperform rating, is expecting results to draw mainly from sales to cloud computing, noting continued “softness” at the carriers, including AT&T (T).
"We believe first-quarter results will be driven by DCI—as four of the top five cloud operators are Ciena customers, cable customers, and new footprint deals (Australia and Japan) that Ciena won over the last several quarters,” he writes.

And like Trebnick, he expects some momentum in the company’s metro market, perhaps driven by Verizon Communications ( VZ).

Netis is looking for the company to affirm its targets for the next three years of 5% to 7% revenue growth and 14% to 16% EPS growth.

BMO Capital’s Tim Long, who has an Outperform rating on the stock, and a $25 target as well, expects results just a tad under consensus, at $640 million and 11 cents per share. He writes you pay attention to the company’s growth overseas, especially in India:
Ciena’s international performance has been impressive and sales now represent 44% of all revenues. We have been particularly impressed by Ciena’s presence in India, where sales grew 100% y/y in FY2017, driven by several infrastructure projects in the country. While we do not expect sales in India to double again this year, we do believe the country will remain a significant growth contributor for some time. Ciena has also been taking share elsewhere in the region, and has added several new customers in Japan, South Korea, and Australia.
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