Wells Fargo Comments on CIENA's (CIEN) Q2 Earnings and Q3 Guidance
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Price: $428.77 -3.17%
Rating Summary:
25 Buy, 7 Hold, 1 Sell
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Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
25 Buy, 7 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wells Fargo is maintaining its Outperform rating and $32-$35 valuation range on shares of CIENA (NASDAQ: CIEN) despite disappointing Q2 results.
The company reported its Q2 results with $418 million in sales and a non-GAAP EPS loss of $0.24, which was well below the firms estimates of $433 million and a loss of $0.09. The Street was expecting $428 million in sales and EPS loss of $0.11.
Gross margin for the quarter was 41.3 percent while operating margin was -3.2 percent, much worst than the firms forecast of 42 percent and 0.4 percent.
Q3 sales guidance of $435-$455 million was in-line with the Street's estimate of $455 million, but was below the firms initial forecast.
The firm believes that CIEN's goal of 7-10 percent operating margins by the end of the year is at risk due to expenses trending higher.
An analyst at Wells Fargo comments, "while we are disappointed by Ciena's Q2 results and initial guidance, we are encouraged to see improving order momentum heading into the seasonally stronger 2H of the fiscal year. We remain constructive on the stock at this point in time as we continue to believe the company remains well positioned to benefit meaningfully from increased carrier investment in 40/100G transport and OTN switching during the second half of the year."
Wells Fargo's current Q3 EPS estimate if $0.08, its FY11 is $0.06 and its FY12 is $1.17. The firms revenue estimates for FY11 and FY12 are $1.808 billion and $2.098 billion.
For more ratings news on CIENA click here and for the rating history of CIENA click here.
Shares of CIENA closed at $24.21 yesterday.
The company reported its Q2 results with $418 million in sales and a non-GAAP EPS loss of $0.24, which was well below the firms estimates of $433 million and a loss of $0.09. The Street was expecting $428 million in sales and EPS loss of $0.11.
Gross margin for the quarter was 41.3 percent while operating margin was -3.2 percent, much worst than the firms forecast of 42 percent and 0.4 percent.
Q3 sales guidance of $435-$455 million was in-line with the Street's estimate of $455 million, but was below the firms initial forecast.
The firm believes that CIEN's goal of 7-10 percent operating margins by the end of the year is at risk due to expenses trending higher.
An analyst at Wells Fargo comments, "while we are disappointed by Ciena's Q2 results and initial guidance, we are encouraged to see improving order momentum heading into the seasonally stronger 2H of the fiscal year. We remain constructive on the stock at this point in time as we continue to believe the company remains well positioned to benefit meaningfully from increased carrier investment in 40/100G transport and OTN switching during the second half of the year."
Wells Fargo's current Q3 EPS estimate if $0.08, its FY11 is $0.06 and its FY12 is $1.17. The firms revenue estimates for FY11 and FY12 are $1.808 billion and $2.098 billion.
For more ratings news on CIENA click here and for the rating history of CIENA click here.
Shares of CIENA closed at $24.21 yesterday.
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