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Ciena Hits 52-Week High: What's Driving the Outperformance?

Shares of Ciena CorporationCIEN scaled a new 52-week high of $36.55 in yesterday's trading session, before closing a tad lower at $34.91. In the past year, the stock has gained 63.7% compared with 81% growth recorded by the industry .

Factors at Play

Yesterday, the networking technology provider reported solid fourth-quarter fiscal 2018 financial results wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate. Quarterly revenues and adjusted net income increased on a year-over-year basis, underscoring management's consistent focus on execution of strategy.

The company's board of directors has authorized a new share repurchase program of up to $500 million, highlighting its commitment to returning wealth to shareholders. Ciena also recorded industry-leading growth and profitability, including double-digit percentage revenue growth and 22% increase in adjusted earnings per share in fiscal 2018.

Growth Drivers

Ciena's ability to successfully strategize for business diversification, drive innovation and leverage its global scale has boosted its market position. The company made substantial long-term investments over several years to address customer needs in high-growth markets and applications.

Notably, Ciena is a big player with more than 40% market share in the global webscale Data Center Interconnect market. Demand drivers for the company's business are strong, particularly as the cloud providers continue to invest in network infrastructure assets to drive their business.

The company maintains a positive stance for Asia-Pacific on the back of expanding growth drivers in the region and strength in key markets. It expects to witness solid growth especially in India. Moreover, new initiatives related to fiber densification, such as 5G and Fiber Deep, are expected to drive new investment strategies from service providers and cable operators, auguring well for Ciena's future business growth prospects.

Ciena anticipates the Adaptive Network, including programmable infrastructure that leverages its industry-leading WaveLogic, to be accretive to earnings in the upcoming quarters. The company announced that the Blue Planet business will operate as its own division, entering fiscal 2019. The move will likely augment its capacity to support consumption models by allowing software business to operate independently of hardware.

Moreover, Ciena expects to keep enhancing revenues and profitability in fiscal 2019 and beyond. With continued growth impetus and core focus, this Zacks Rank #2 (Buy) stock is anticipated to touch new 52-week highs in fiscal 2019.

Other Stocks to Consider

Other top-ranked stocks in the broader industry include QUALCOMM Incorporated QCOM , Ubiquiti Networks, Inc. UBNT and Juniper Networks, Inc. JNPR . While Qualcomm and Ubiquiti sport a Zacks Rank #1 (Strong Buy), Juniper carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Qualcomm has a long-term earnings growth expectation of 10.9%. It beat earnings estimates in each of the trailing four quarters, the average being 18.5%.

Ubiquiti has a long-term earnings growth expectation of 14%. It surpassed earnings estimates in three of the trailing four quarters, the average positive surprise being 11.3%.

Juniper has a long-term earnings growth expectation of 5.5%. It beat earnings estimates in each of the trailing four quarters, the average being 11%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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