Ciena Stock Surges Amid Earnings Miss, Company Updates Long-Term Targets
Ciena stock catapulted Thursday after the optical gear maker gave 2020 guidance and updated long-term financial targets on its earnings call with analysts. Ciena earnings for its fiscal fourth quarter missed estimates while revenue edged by views.
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Shares in Ciena (CIEN) surged 20.4% to close at 42.62 on the stock market today. Short interest in Ciena stock had increased heading into the quarterly earnings.
Ciena said it expects 15% adjusted operating margin for fiscal 2020. It forecast 16% to 17% operating margin over the next three years, boosting free cash flow.
In addition, Ciena reiterated fiscal 2020 sales growth near 6%, in-line with consensus estimates for revenue of $3.8 billion.
"We believe that investors' sentiment was negative on Ciena going into the call," said Raymond James analyst Simon Leopold in a research note. "Management maintained its 2020 sales estimate at the low end of the 6% to 8% range but in line on a dollar basis with consensus for $3.8 billion, which we think might be the largest contributor to the intraday pricing upside."
He added: "We believe the operating margin can expand to 16% to 17%, a level Ciena has not achieved since fiscal 2001."
Ciena Stock: Earnings Up 9%
Hanover, Md.-based Ciena (CIEN) said it earned 58 cents per adjusted share, up 9% from a year earlier, with revenue rising 7.6% to $968 million. A year earlier, Ciena earnings came in at 53 cents a share on sales of $899 million.
Analysts expected the maker of fiber-optic communications gear to report profit of 63 cents on sales of $964.3 million for the period ended Oct. 31.
Ciena stock hit an 11-year high of 46.78 on July 29. Shares in Ciena had corrected nearly 25% heading into its fiscal fourth-quarter earnings release.
Ciena Earnings: Lowered Expectations
Analysts had lowered Ciena earnings estimates heading into the fourth-quarter report.
Ciena is expected to roll out new 800 gigabit-per-second optical gear products in 2020.
Ciena has gained share vs. Infinera (INFN), analysts say. In Asia, Ciena has fared well vs. China's Huawei.
Ciena also competes against Acacia Communications (ACIA). Cisco Systems (CSCO) recently agreed to buy Acacia.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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