By Nate Wolf
Ciena shareholders didn't find much to like about the networking company's quarterly earnings report but analysts are doubling down on the stock.
Shares slumped 13% on Thursday after Ciena beat earnings and revenue expectations for its fiscal first quarter and lifted its outlook for the fiscal year. Some combination of sky-high expectations, supply-chain hiccups, and a big capital-expenditure figure troubled investors. Shares were up 1.2% to $302.84 on Friday.
If you came into the earnings report as a fan of Ciena it likely was because of the soaring demand for networking solutions within and between data centers. That demand isn't going anywhere, according to BofA Securities, which upgraded Ciena to Buy from Neutral and lifted its price target to $355 from $260 in a research note Friday.
The optical networking market tends to be cyclical, which is why BofA was cautious until now. Ciena stock also is trading at a high multiple of 44 times estimated 12-month earnings. But the sheer volume of data-center spending has changed the networking cycle.
"Cloud spending on optical remains robust, with Cloud providers adding significant [data-center] capacity in the next three years," wrote analyst Tal Liani. "We define the current cycle as a super-cycle and expect it to continue well into 2027."
Hyperscaler customers are increasingly turning to the company for ready-to-use solutions across its range of products, Citi analyst Atif Malik argued in a research note. In one case, a hyperscaler is deploying Ciena's networking architecture to connect two regional data-center clusters dozens of miles away from each other. Ciena sized the project at hundreds of millions of dollars.
Citi reiterated a Buy rating on the stock and lifted its price target to $345 from $280. The stock may trade at a premium, the firm said, but "this valuation is warranted" given Ciena's growth trajectory.
Barclays came out of the report similarly optimistic. The firm maintained an Overweight rating on the stock and boosted its price target to $372 -- among the highest figures on Wall Street -- from $279.
While supply bottlenecks may cap Ciena's revenue and earnings potential, the company has been working on ways to reduce costs, substitute certain components, and rework contracts with suppliers, Barclays pointed out.
The firm raised its estimates for fiscal years 2026 through 2028 based on the combination of cost-cutting initiatives and continued demand, particularly from cloud-computing customers.
Write to Nate Wolf at nate.wolf@barrons.com
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March 06, 2026 10:01 ET (15:01 GMT)
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