Boston, MA 04/07/2014 (wallstreetpr) – There are several factors in play to drag the shares of the network equipment company, Ciena Corporation (NYSE:CIEN) since the last few months and Friday was not unusual to depict the similar trend after the company posted a fall of more than 7% and closed at $21.63.
Guides Margin On The Lower Side
On Friday, Ciena Corporation (NYSE:CIEN) informed during its investor day that it anticipates operations margin for the year 2014 to fall to the lower end of its earlier stated guidance of 7-10%. According to the research firm, Citi, the projection indicates that the company is still far off from its set number of 10%. The firm added that while they have strong faith in the sustainability in the company’s product cycle, the continuing pressure exerted by the weakness in operating margin forces them to settle for the P/E of around 20 times their current year estimate of $1.24. Citi has ‘neutral’ rating on the stock at present.
The company had been subjected to a rating downgrade from the analyst at RBC Capital, who assigned ‘sector perform’ rating to it against it previous ‘buy’ rating. RBC cited concerns over the company’s falling free cash flow and is wary that the recession might hurt it in a greater way than expected.
Experts Are Confident
On the contrary, analyst at William Blair, who has ‘outperform’ rating on the stock, mentioned that the forecast by the company means that their operating margin for the first half of the year is 5%, but it does not rule out the possibility of 10% in the second half. And, therefore, the firm has marginally revised its EPS estimate for the company upward for the year 2014 and 2015. Industry experts too believe that the company has underlying strength, which can help it to stand against the odds in the forthcoming period. Experts place the logic of increased telco spending, the company’s key clients and its diversified business as main factors to assist it in the future growth.
