Ciena (CIEN) continues to see strong demand driven in part by the macro environment, but also by the "leadership" position the company has in 800ZR, DCOM, RLS modules, Morgan Stanley said in a Friday note.

While these leadership positions are not expected to last forever, Ciena has put itself in a position to get orders at a time when other suppliers are "struggling with their performance," Morgan Stanley said

With gross margin upside and pricing flexibility lower, the company is increasing operating leverage, allowing for more earnings per share follow-through than previously expected, the firm said.

Morgan Stanley said it now expects fiscal Q1 EPS and non-GAAP revenue of $1.14 and $1.39 billion, up from $0.90 and $1.25 billion, and fiscal 2026 EPS and non-GAAP revenue of $5.15 and $5.90 billion, up from $4.48 and $5.49 billion previously.

The firm raised its price target on Ciena to $195 from $185 and maintained its equalweight rating.

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