Ciena's (CIEN) Q3 results will be closely watched for backlog conversion amid ongoing supply constraints, while strong demand and Cloud growth remain key focus areas, BofA Securities said in a note Thursday.

The company is scheduled to report its Q3 results on Sept. 4.

The stock has fallen more than 35% since last quarter's results, following a broader de-rating across the optical group. The decline was driven largely by supply constraints that have limited upside to full-year 2026 revenue expectations, the analysts said.

BofA said it believes demand remains robust. Key areas to watch are the conversion of Ciena's backlog despite ongoing supply constraints, continued Cloud growth, the ramp of 800-gigabit pluggables, growth in DCOM and RLS/Hyper-Rail, and gross margin sustainability near 45%.

About $5.1 billion of Ciena's $7.7 billion backlog is expected to convert to revenue over the next 12 months, providing almost 85% visibility into the Street's $6.3 billion fiscal 2026 revenue estimate, according to the note.

BofA lowered its price target on Ciena from $660 to $550 and reiterated its buy rating.

Price: 399.82, Change: +0.35, Percent Change: +0.09