Ciena Corporation retains leadership

Exchange: NYSE

Sector: Technology

Industry: Communication Equipment

Entry strategy

Price: $28–$30

Stop-loss: under $22.5

Take profit: $45

Investment horizon: until the end of 2019

Company details

Ciena Corporation was founded in 1992 and is headquartered in Hanover, Maryland. The company develops infrastructure and intelligent software solutions and offers a wide range of services.

    Ciena works with companies in healthcare, finance, media, utilities, entertainment, transportation and retail. Some of the major customers of the corporation are:

  • financial companies — Australian Stock Exchange, Cal (Israel Credit Cards Ltd), Hong Kong Stock Exchange, Korea Exchange;
  • utility companies — JEA, Los Angeles Department of Water and Energy, Navajo Reservation Utilities Management;
  • media holdings — Gannett, Swiss Broadcasting Corporation, Neos Networks;
  • medical facilities — Iowa Health System, St. Francis Hospital in Hartford, UC Health Clinic in Cincinnati, WakeMed Health and Hospitals.

The issuer's capitalization is more than $4.8 billion (group +Mid).

Company financial performance

Since 2013, Ciena Corporation has shown a steady increase in sales revenue (see Table 1). 2017 was a turning point for the corporation: it showed a qualitative leap in the growth of almost all types of profits, including earnings per share (from $0.83 to $7.53).

Table 1. Financial results of Ciena Corporation ($CIEN) for 2013–2018. Source: MarketWatchOpen original image

In 2018, telecommunications giants, such as AT&T and Verizon, are actively updating their equipment. The supplier for them is Ciena. Large contracts have a positive effect on the company's financial results.

The company's great achievements for 2017 include the dynamics of net debt. Due to the consistent repayment of debts and the growth of cash and cash equivalents, the value of the company’s net debt became negative in 2018. In 2013, the value of the net debt of the corporation was $700 million and by July 2018 it had dropped to –$52 million.

The trend towards improving the financial sustainability of business is especially important in the context of the US Federal Reserve tightening monetary policy. Ciena Corporation minimizes the risks of more expensive dollar loans refinancing, which increases the investment attractiveness of its shares.

Technical analysis (trading plan)

Graph 1. Technical analysis of Ciena Corporation ($CIEN). Source: TradingViewOpen original image

Published on the 7th of November, 2018