Shares of fiber-optic networking giant Ciena (CIEN) are down 30 cents, or 1%, at $21.27, after Needham & Co.'s Alex Henderson this morning reiterated a Buy rating on the shares, but cut his price target to $28 from $31, even though he sees competition in decline.
Henderson's reason for cutting his target is strictly the company's lower-than-expected outlook on August 31st.
Ciena's CEO, Gary Smith, Henderson suggests, has been somewhat frustrated with Street estimates.
"Lowered Ciena estimates, at the behest of the company, lower the bar for the company and should reduce the volatility in the stock," he writes.
"We suspect Ciena is looking to assuage investors frustrated by the swing in the shares on slight estimate variances."
Coriant looks financially strapped and is losing share and likely shrinking. Nokia acquired ALU and after a bout of aggressive pricing is now telling the optical group management it needs to figure out how to find a way to profitability. Cisco has a limited line and is shifting its focus to cloud. Infinera looks to rebound after a tough year but is much smaller than Ciena. No one argues the optical systems market isn't an important market with solid growth potential and growing need. Ciena is well positioned.