Soleil Securities analyst Michael Genovese this morning downgraded shares of Ciena (CIEN) to Sell from Hold, while lifting his price target to $15, from $14. Note that the stock closed yesterday at $18.23.
“We somewhat reluctantly put a Sell rating on the shares,” he writes. “We like both the optical upgrade cycle story and Cinea’s positioning in long haul and metro transport, optical and OTN switching and carrier Ethernet….However, we believe the stock is significantly ahead of itself and we expect it to underperform in the near term due to disappointing guidance provided at the analyst day and significantly heightened integration/execution risk over the next several quarters.”
Genovese noted several items from yesterday’s analyst day that he didn’t like:
- Quarterly run rate for the old Nortel metro business is $200 to $210 million, below his estimate of about $250 million.
- Post-integration operating margin target of 7%-10% compares to his 10% estimate.
- Combined opex of $195 million to $200 million is above his estimate of $175 million to $180 million.
CIEN is down 63 cents, or 3.5%, to $17.60.
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