Argus: Selloff In Ciena Shares Are Overdone

Argus Research issued a company note on Ciena Corporation CIEN after the company's stock dropped more than 16 percent Thursday due to poor revenue guidance. Argus reiterated a Buy rating and issued a 12-month price target of $30. Shares traded recently at $19.61, down 2 percent. Analyst Jim Kelleher wrote, "Ciena's results are...unpredictable and management's guidance is an incomplete predictor of trends in the business. In any given year, Ciena will alternate disappointing guidance with blowout forecasts...We would use the selloff as an opportunity to add or initiate positions in Ciena which we regard as the premier company in the global optical communications space." Argus believes that Ciena will continue to perform well going forward. They note that Ciena's management expressed confidence in the company's ability to expand margins while growing faster than its competitors. Looking ahead, Ciena believes that it can continue to outperform its peer group by expanding its European footprint, transforming macro networks for more robust traffic loads, and capitalizing on the company's top-rated market position in the data center interconnect market. As far as risks for Ciena, Argus see challenges facing the company such as a narrow customer focus and possibly constrained capital spending. However, analysts believe that Ciena's strong customer relationships and market share offset these risks.