UBS Maintains a 'Neutral' on CIENA (CIEN); Q3 EPS Ahead But Profitability Pushed Out

UBS maintains a 'Neutral' on CIENA (NASDAQ: CIEN), price target lowered from $17.25 to $16.

UBS analyst says, "Our view is the investment case for Ciena still hinges upon the company’s true operating profitability. Our deep bottoms-up analysis suggests Ciena is likely to see challenges when working towards its long-term OM target of 7-10%, while most optical competitors have low single digit operating profits. Regarding 3Q, Ciena posted OM of 3.8% vs. our estimate of 1.8%, and guided its 4Q OM flattish."

"With softer customer spending and lengthening sales cycles in the EMEA, we lower our FY11 and FY12 rev estimates to $1.74B (+41%) and $1.92B (+10%) vs. our prior $1.77B (+43%) and $1.96B (+11%). With profitability being pushed out, we lower our margin assumptions and EPS estimates. Our FY11 and FY12E EPS ex options are now -$0.17 and $0.70 vs. prior -$0.23 and $0.85."

For more ratings news on CIENA click here and for the rating history of CIENA click here.

Shares of CIENA closed at $14.71 yesterday.

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