UPDATE: Goldman Sachs Reiterates Neutral Rating, Lowers PT on Ciena Corporation
In a report published Friday, Goldman Sachs Group reiterated its Neutral rating on Ciena Corporation (NASDAQ: CIEN), but lowered its price target from $18.00 to $16.00.
Goldman Sachs noted, “We maintain our Neutral rating, having cut our estimates and price target following disappointing revenue and gross margin guidance as well as weaker-than-expected F3Q gross margins (especially when excluding approximately 60bp benefit from a one-time 100% gross margin $4.5mn revenue credit). Ciena saw some weakness in Europe during F3Q, but the bigger issue was a delay in fully deploying N American design wins as next-generation products are requiring more time for carriers to deploy than Ciena had expected. We believe Oct-quarter guidance is achievable, as (1) we continue to believe in Ciena's ability to capitalize on next-generation design wins including switching deployments, (2) a possible easy F4Q qoq comp given October guidance implying qoq revenue declines in what is typically a seasonally strong F4Q despite a book to bill of 1.0 in July, and (3) our continued belief that N American carrier capex will be above seasonal in 2H12. That said, we expect Ciena's gross margins to remain constrained by lower margin chassis and services associated with new deployments. We continue to prefer Buy rated JDSU for better N American capex. We lower FY12E/FY13E/FY14E non-GAAP EPS to ($0.26)/$0.54/$1.34 from ($0.04)/$0.80/$1.45 given slightly lower revenues and weaker margins.”
Ciena Corporation closed on Thursday at $13.46.
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