Year-Long Decline in Ciena (CIEN) Creates Buying Opportunity -Barron's
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This weekend, Barron's published an article highlighting several reasons why shares of Ciena (Nasdaq: CIEN) could be a great play "on the convergence of voice, video and data" communications.
The article points out that Ciena has had a rough time on Wall Street over the last year: the stock is down about 77% since hitting a 52-week high of $49.55 in late October. Barron's notes that the slide came as Ciena's major customers -- AT&T (NYSE: T), Verizon (NYSE: VZ) and Sprint (NYSE: S) -- announced that they would reduce their capital spending given the weakening economy. As a result, Ciena recently guided sales during Q4 below the Street estimate.
At the same time, Barron's believes that the recent decline has created a buying opportunity for investors with a longer-term time frame. Ciena currently holds about $1 billion, or $10 per share, in cash, implying net cash (cash minus debt) of about $2.56 per share. With shares of Ciena currently trading under 4x estimated EPS, the stock certainly looks cheap considering that profits are expected to grow 16-17% over the long-term.
The Barron's article also highlights Ken Griffin's large investment in Ciena: his fund, Citadel Investment Group, accumulated a 5% stake in the company over the summer, when Ciena's price was in the teens and mid-to-high 20's.
After initially trading higher on the positive Barron's article, shares of Ciena have now moved into negative territory. The stock most recently traded at $11.16, down $0.11, or about 1% from Friday's close.
Ciena Corporation provides network infrastructure, associated software, and professional services in the United States and internationally.
The article points out that Ciena has had a rough time on Wall Street over the last year: the stock is down about 77% since hitting a 52-week high of $49.55 in late October. Barron's notes that the slide came as Ciena's major customers -- AT&T (NYSE: T), Verizon (NYSE: VZ) and Sprint (NYSE: S) -- announced that they would reduce their capital spending given the weakening economy. As a result, Ciena recently guided sales during Q4 below the Street estimate.
At the same time, Barron's believes that the recent decline has created a buying opportunity for investors with a longer-term time frame. Ciena currently holds about $1 billion, or $10 per share, in cash, implying net cash (cash minus debt) of about $2.56 per share. With shares of Ciena currently trading under 4x estimated EPS, the stock certainly looks cheap considering that profits are expected to grow 16-17% over the long-term.
The Barron's article also highlights Ken Griffin's large investment in Ciena: his fund, Citadel Investment Group, accumulated a 5% stake in the company over the summer, when Ciena's price was in the teens and mid-to-high 20's.
After initially trading higher on the positive Barron's article, shares of Ciena have now moved into negative territory. The stock most recently traded at $11.16, down $0.11, or about 1% from Friday's close.
Ciena Corporation provides network infrastructure, associated software, and professional services in the United States and internationally.
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