Needham Remains Bullish On Ciena Ahead Of Its Quarterly Results As Supply Appears To Be Improving

  • Ciena Corp CIEN reports quarterly results on September 1 before the market opens. 
  • Needham analyst Alex Henderson expects another supply-constrained quarter, with Orders above Shipments and Revenues modestly ahead of forecast. 
  • He reiterated a Buy and price target of $88.
  • For the October quarter, the analyst thinks the Street Q/Q growth forecast looks a bit aggressive with Product Sales up 25%-30% Q/Q, not on demand, but supply. 
  • He thinks the Q/Q growth in Product Sales implied by the Street estimate may be hard to achieve even with improving supply. 
  • Conversely, he thinks 1Q23 will be up Q/Q while the Street has it down. 
  • He thinks it's only a matter of time till the large and still growing backlog translates into substantial Revenue and EPS. 
  • Service Revenue will likely grow in the quarter, partially offsetting the decline in Product Sales. 
  • He thinks CIEN looks better positioned in a rising interest rate environment than most names.
  • Price Action: CIEN shares traded lower by 1.94% at $52.58 on the last check Monday.
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