Morgan Stanley Says Ciena Can Outgrow The Market

Ciena Corporation (NYSE: CIEN) caught an upgrade after a new analyst report says the company can outgrow the market.

The Analyst

Morgan Stanley Meta Marshall upgraded from Equal-Weight to Overweight, and raised his price target from $29 to $30.

The Thesis

Ciena’s WaveLogic AI and global scale has created a share gain opportunity, Marshall said in a note.

The attractiveness of telecom and datacomm spend pushed Ciena at the top of Morgan Stanley’s Optical Scorecard. After conducting a meeting with company management, the analyst said sales momentum can persist for at least the next year.

“While we have always been mindful that optical is complex, we gained more appreciation last week for how much CIEN is using technology in combination with reach to gain share, with reach providing a more persistent advantage when technology gaps may not be as large,” said Marshall.

The analyst says the company can get above $2 EPS by 2019 on revenue strength, based on:

• Eight new Tier 1 wins;
• Larger than expected hyperscale spend; and
• New projects with existing customers.

Marshall said Ciena’s traction with new customers and categories continue to be encouraging, a sign he said should help the company outgrow the market.

Price Action

Shares are up over 3 percent, trading around $25.71 at time of publication.

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