Needham & Company's Alex Henderson commented that they would have liked cleaner results, but data points to a strong outlook. The analyst commented,
We see this as a minor perturbation on a rapidly improving path and a temporary impact to margins. Ciena offered positive comments about Gross Margins going forward, offered full year FY14 Operating Margin Guidance at the lower end of the longer term target of 7 percent - 10 percent Operating Margins which is consistent with our forecast of 7.8 percent Operating Margins, and expressed high degree of confidence in the outlook.
Henderson noted that one large service provide in Europe pulled ahead an order because they didn't want to install a new chassis during the holiday period. The revenue got taken out of the month of November, leading to a slightly lower Q1 outlook.
Ciena also mentioned the signing of a Global Supplier agreement with Vodafone (Nasdaq: VOD). Henderson commented,
We believe this will result in significant revenue growth at this Tier 1 customer. It is also notable since Vodafone just announced a 1 billion Euro increase in its CapEx to 11 billion euros with a fair portion of that earmarked for network capacity upgrades.
Needham & Company has Ciena at Buy with a $31 price target.
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Shares of CIENA closed at $21.31 yesterday, with a 52 week range of $14.14 to $27.94.