Stock Markets
CIENA rating cut to neutral, stock target lowered on challenging market
On Thursday, Rosenblatt Securities adjusted its stance on CIENA Corp (NYSE: CIEN), downgrading the stock from Buy to Neutral and decreasing the price target to $52.50 from the prior $65.00. The firm also revised its fiscal year 2025 earnings per share (EPS) forecast for CIENA to $3.00, a drop from the previous estimate of $3.24, and shifted the price-to-earnings (PE) ratio used in its evaluation from 20 times to 17.5 times.
The downgrade is attributed to three main factors impacting CIENA’s outlook. Firstly, there is an expectation that while the Telecom market may show some normalization, Optical spending by large telecommunications companies is likely to remain constrained in 2025. Secondly, CIENA faces challenging comparisons in the Webscale Cloud market, where it is maintaining but not increasing its market share.
Moreover, the emergence of the ZR pluggables market presents a risk to CIENA’s revenue. The lower-priced ZR products could potentially cannibalize sales of the company’s higher-priced embedded data center interconnect (DCI) solutions, where CIENA is currently a leading provider.
Lastly, CIENA’s artificial intelligence (AI) narrative for fiscal years 2024 and 2025 is not considered strong. Although the company may begin to see revenue from coherent modems for short-range data center applications in the second half of 2025, Rosenblatt suggests that Infinera Corp (NASDAQ: NASDAQ:), which has been labeled a Buy, presents a more compelling AI solution for 2025.
Infinera’s development of 1.6Tbps indium phosphide laser chips, intended for Datacom transceiver manufacturers and Webscale Cloud providers, positions it as a potential market share gainer in the DCI and Metro markets. The firm notes that Infinera is gaining market share from competitors other than CIENA, but highlights that CIENA seems to be mirroring the broader market’s demand challenges, particularly in the Telecom sector.
InvestingPro Insights
In light of the recent downgrade by Rosenblatt Securities, it is important to consider various financial metrics and expert insights provided by InvestingPro to gain a broader understanding of CIENA Corp’s (NYSE: CIEN) current market position.
According to InvestingPro data, CIENA boasts a market capitalization of $7.13 billion, with a P/E ratio standing at 32.01, which adjusts to 27.96 when considering the last twelve months as of Q1 2024. This suggests a premium valuation relative to the company’s near-term earnings growth. Moreover, the company has experienced a revenue growth of 13.6% over the last twelve months leading up to Q1 2024, despite a slight quarterly dip of -1.78%.
InvestingPro Tips highlight that CIENA’s management has been actively engaging in share buybacks, which could be indicative of their confidence in the company’s value. Furthermore, the valuation implies a strong free cash flow yield, which may appeal to investors looking for cash-generative businesses. Notably, CIEN operates with a moderate level of debt and liquid assets that exceed short-term obligations, providing the company with a stable financial cushion.
For readers interested in a deeper analysis, InvestingPro offers more tips on CIENA, which can be found at https://www.investing.com/pro/CIEN. Utilizing the coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, granting access to a wealth of investment insights and data to inform their investment decisions. With 7 additional InvestingPro Tips available, investors can explore the nuances of CIEN’s financial health and market position in greater detail.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
(Reuters) -Private equity firm Insight Partners is on the brink of closing a new $10 billion-plus fund, roughly half the amount originally targeted, the Financial Times reported on Sunday, citing five people with knowledge of its plans.
Insight will not formally close its 13th fund until early next year, the report said, adding that the final figure may be closer to $12 billion.
Insight Partners declined to comment on the report.
The report said Insight is using a private equity-style structure to sell more than $1 billion worth of stakes in start-ups and to free up cash to return to investors.
One of the start-ups is Israeli cybersecurity firm Wiz, which had called off a $23 billion deal with Google parent Alphabet (NASDAQ:) in July, the report said.
New York-based Insight raised $20 billion for its 12th flagship fund in 2022, aiming to ramp up investments in software and technology companies.
JERUSALEM (Reuters) -Prime Minister Benjamin Netanyahu said Israel would inflict a “heavy price” on the Iran-aligned Houthis who control northern Yemen, after they reached central Israel with a missile on Sunday for the first time.
Houthi military spokesman Yahya Sarea said the group struck with a new hypersonic ballistic missile that travelled 2,040 km (1270 miles) in just 11 1/2 minutes.
After initially saying the missile had fallen in an open area, Israel’s military later said it had probably fragmented in the air, and that pieces of interceptors had landed in fields and near a railway station. Nobody was reported hurt.
Air raid sirens had sounded in Tel Aviv and across central Israel moments before the impact at around 6:35 a.m. local time (0335 GMT), sending residents running for shelter. Loud booms were heard.
Reuters saw smoke billowing in an open field in central Israel.
At a weekly cabinet meeting, Netanyahu said the Houthis should have known that Israel would exact a “heavy price” for attacks on Israel.
“Whoever needs a reminder of that is invited to visit the Hodeida port,” Netanyahu said, referring to an Israeli retaliatory air strike against Yemen in July for a Houthi drone that hit Tel Aviv.
The Houthis have fired missiles and drones at Israel repeatedly in what they say is solidarity with the Palestinians, since the Gaza war began with a Hamas attack on Israel in October.
The drone that hit Tel Aviv for the first time in July killed a man and wounded four people. Israeli air strikes in response on Houthi military targets near the port of Hodeidah killed six and wounded 80.
Previously, Houthi missiles have not penetrated deep into Israeli air space, with the only one reported to have hit Israeli territory falling in an open area near the Red Sea port of Eilat in March.
Israel should expect more strikes in the future “as we approach the first anniversary of the Oct. 7 operation, including responding to its aggression on the city of Hodeidah,” Sarea said.
The deputy head of the Houthi’s media office, Nasruddin Amer, said in a post on X on Sunday that the missile had reached Israel after “20 missiles failed to intercept” it, describing it as the “beginning”.
The Israeli military also said that 40 projectiles were fired towards Israel from Lebanon on Sunday and were either intercepted or landed in open areas.
“No injuries were reported,” the military said.
PARIS (Reuters) – Eight people have died trying to cross the Channel from France to England, French authorities said on Sunday, confirming earlier media reports.
This latest incident follows the deaths of 12 people earlier this month when their boat capsized in the Channel on its way to Britain and highlights the pressure on the British and French governments to find ways to tackle the boat crossings.
Jacques Billant, the Prefect of the Pas-de-Calais region, said that rescue crews were alerted that a boat with 59 people onboard was in difficulty in waters off the coast of Ambleteuse in the Pas-de-Calais area.
“A new drama took place around one in the morning and we deplore the death of eight people,” he told a news conference, adding that the other 51 onboard were now in the care of rescue and medical crews.
The dead were men from Eritrea, Sudan, Syria, Egypt, Iran and Afghanistan, he added.
The Channel is one of the world’s busiest shipping lanes and currents are strong, which makes crossing on small boats dangerous.
The latest incident brings to 46 the number of people who have died trying to cross the Channel from France since the start of the year, Billant said.
On September 14 alone there were eight attempts to cross the Channel from France and some 200 migrants were rescued, he said.
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