Ciena Corp (CIEN)

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Tea Leaves Point to Strength at CIENA (CIEN) - MKM Partners

April 29, 2013 11:36 AM EDT Send to a Friend

While investors remain cautious-to-undecided on the Communications Equipment sector, everything is pointing to strength at CIENA (NASDAQ: CIEN), MKM Partners analyst Michael Genovese said Monday. The analyst is upbeat into the company's Q2 earnings which are due in May or early June.

First, the analyst notes that AT&T's revised capex plan increases their confidence it will start a 100G optical network build in 2014. "Our checks tell us that AT&T will likely turn its attention to 100G optical after nationwide LTE coverage is done," the analyst said. "Accelerated LTE coverage gives us more confidence AT&T will begin 100G in earnest in 2014. Ciena is a favorite to be a primary 100G vendor, we think."

In addition, strength at direct competitor Infinera (NASDAQ: INFN) is a positive read for Ciena, the analyst said. "According to our checks, Ciena and Infinera are soundly beating Alcatel-Lucent in the North American terrestrial market and in underseas optical," he said. "We think this is the primary reason ALU performed poorly in these areas in 1Q13."

Lastly, Genovese said Tellabs (NASDAQ: TLAB) and Juniper (NASDAQ: JNPR) results read very well for Ciena's near term Verizon 100G metro business.

The firm maintained a Buy rating and $22 price target on CIENA.

For an analyst ratings summary and ratings history on CIENA click here. For more ratings news on CIENA click here.

Shares of CIENA closed at $14.78 yesterday, with a 52 week range of $11.45-$18.39.
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