Goldman Sachs Downgrades CIENA (CIEN) to Neutral

Goldman Sachs downgraded CIENA (NYSE: CIEN) from Conviction Buy to Neutral with a price target of $27.00.

Analyst Doug Clark comments "As an industry bellwether, we continue to like Ciena’s strong customer exposures, metro project wins, and improving web 2.0 traction. This supports our 8% revenue growth forecast for FY17E (Oct). Ciena is benefiting from Verizon’s metro build-out this year, and we consider it to be well positioned for several other Tier-1 deployments as well. India is another area of strong growth, with Ciena involved in every major carrier’s 4G deployments. Separately, the company is continuing to improve its web 2.0 traction, with DCI driving nearly $100mn of revenues this year. That said, we see competition increasing, as Infinera returns to the mix with new products across metro, DCI and submarine markets, and Acacia and others enable Ciena’s competition. We expect margin upside to be fairly limited going forward owing to competition and new footprint deployments. Valuation remains reasonable with Ciena trading at 1.3X CY17E EV/S (14X P/E) vs. telecom equipment peer group trading at 1.5X, and only modestly above its 5-year average NTM EV/S of 1.2X."

For an analyst ratings summary and ratings history on CIENA click here. For more ratings news on CIENA click here.

Shares of CIENA closed at $23.74 yesterday.

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