Evercore lifts Ciena rating on AI-driven optical networking boom

Investing.com -- Evercore ISI upgraded Ciena to Outperform and sharply raised its price target to $550 from $375 on Monday, calling the company an attractive way to play optical networking's growing role in the AI buildout.

The firm said connectivity between and inside data centers is becoming "an increasingly critical gating factor for frontier LLM monetization," a problem Ciena is purpose-built to address as "the only fully dedicated optical systems provider."

It sees Ciena's addressable market growing at a 24% annual rate to $52 billion by fiscal 2029.

Evercore believes Ciena can sustain more than 30% sales growth and over 35% earnings growth, reaching or surpassing $25 a share in earnings by fiscal 2029. It pointed to multiple growth drivers, including its cloud WDM franchise, deep hyperscaler co-development, share gains in coherent pluggables and access inside the data center.

The firm also sees margins expanding, with Ciena targeting roughly 50% gross margin and 32% to 35% operating margin by fiscal 2029, up from 2027 guidance, helped by favorable mix, cost cuts and pricing actions.

While some investors were disappointed by Ciena's fiscal 2027 guidance for 30% sales growth, down from 34% in 2026, Evercore called the guidance conservative and sees a path to more than 40% growth if supply constraints do not worsen and pricing holds.

On a low-20s earnings multiple, it feels the stock should work toward $550-plus.

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