Ciena Corporation CIEN recently announced its board of directors’ decision to buy back up to $1 billion worth of its common stock, commencing in fiscal 2025 and extending through the end of fiscal 2027. Investors cheered the development leading to a 7.4% jump in CIEN’s stock price in the last trading session.
Ciena Corporation Price and Consensus
Ciena Corporation price-consensus-chart | Ciena Corporation Quote
The new authorization comes at a time when the company approaches the completion of its existing repurchase program, which has run successfully for the past three years. In the last reported quarter, Ciena repurchased about 600,000 shares worth $29 million. It plans to buy back a total of $250 million in shares by the end of fiscal 2024.
Ciena’s new repurchase program provides flexibility in terms of how and when the company chooses to buy back shares. The company may buy stocks at management’s discretion in the open market, through privately negotiated transactions, or structured deals facilitated by investment banking institutions. This flexibility allows the company to adapt its repurchase strategy based on evolving market conditions, stock price performance and liquidity considerations. The repurchase will be funded using cash on hand or cash generated from Ciena’s operations. Apart from these, Ciena has the option to implement Rule 10b5-1 plans, which allow for time-to-time stock purchases that comply with insider trading laws.
The share repurchase program is a direct way for it to return capital to its shareholders. By reducing the number of outstanding shares, the company can potentially increase earnings per share, which benefits existing shareholders. The initiative highlights Ciena’s commitment to delivering value to shareholders and maintaining a disciplined capital allocation strategy.
Headquartered in Hanover, MD, Ciena Corporation is a leading provider of optical networking equipment, software and services. Ciena’s performance is affected by slower-than-expected recovery of order volumes from international service providers amid momentum with cloud providers. Due to macroeconomic and geopolitical tensions in Europe, service providers continue to exercise a cautious spending approach.
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Nonetheless, expanding the deal pipeline with service providers, especially in North America, is a plus. Heightened demand for bandwidth aided by rising artificial intelligence-driven network traffic and cloud adoption bodes well. Deal wins from major cloud providers across a broad spectrum of applications boosted Direct Cloud Provider’s fiscal third quarter revenues by 9% sequentially. Strength in Blue Planet revenues, with a 97% rise year over year, was a key catalyst. It expects the adoption of WaveLogic 6 Extreme to drive top-line growth in the fiscal fourth quarter as it begins shipping.
CIEN’s Zacks Rank & Stock Price Performance
CIEN currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 42.1% in the past year compared with the sub-industry's growth of 41.6%.
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Stocks to Consider
Some better-ranked stocks from the broader technology space are Ubiquiti UI, Zillow Group, Inc. ZG and Airgain Inc. AIR. UI sports a Zacks Rank #1 (Strong Buy), whereas ZG and AIRG carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Ubiquiti company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
Zillow Group delivered an earnings surprise of 37.41%, on average, in the trailing four quarters. The company is witnessing solid momentum in rental revenues, driven by growth in both multi and single-family listings, which is a positive factor.
Airgain has a long-term earnings growth expectation of 35%. Based in San Diego, CA, Airgain provides antenna products as integrated wireless solutions. These devices are designed to address vital connectivity requirements during product development and throughout the entire lifecycle of other industries, such as automotive and consumer, in addition to various sectors within an enterprise.
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