Ciena's (CIEN) high valuation, peak margin, and risk of slower orders are concerning, despite additional revenue growth upside for the next few quarters, driven by artificial intelligence, BofA Securities analysts said in a Tuesday note.

"Ciena's stock roughly tripled over the last year. Valuations have expanded significantly. With both trading at or above 40x forward P/E, Ciena and Arista now trade at substantially higher levels than their historical averages of ~20x and 30x, respectively," the note said.

Analysts expect hyperscaler capex growth to decelerate in 2026, the analysts said, adding that Ciena is expected to be trading on order trends, backlog and deferred revenue trends, which they consider key risks, given the peak metrics.

"While there is still potential for upward revisions, particularly if AI workloads and model complexity scale faster than anticipated, we believe the magnitude of future revisions will likely be more muted," the analysts said.

BofA downgraded the stock rating to neutral from buy.

Price: 245.43, Change: +2.01, Percent Change: +0.83