Respect (HUNDRED) simply delivered the type of quarter most firms dream about. Income jumped 40%, revenue almost quadrupled, and administration raised its full-year outlook.
Wall Street appreciated what it noticed. Analyst after analyst lifted worth targets on the inventory, some by a whole bunch of {dollars}.
After which shares fell anyway.
Ciena (CIEN) dropped sharply proper after the report, a wierd method for the market to greet a file quarter and a stack of bullish new targets.
Morgan Stanley’s replace sits proper on the heart of that break up. The financial institution raised its goal sharply, but left its score untouched and landed on a quantity that appears odd subsequent to the place the inventory truly trades.
That blend tells you ways cautiously components of Wall Road are studying this AI winner, even after outcomes this sturdy.
Morgan Stanley raises its Ciena worth goal however retains a cautious score
Morgan Stanley analyst Meta Marshall lifted her worth goal on Ciena to $490 from $405, a soar of about 21%, whereas preserving an equal-weight score, GuruFocus stories.
Equal-weight, in Morgan Stanley’s system, means the inventory ought to roughly observe the remainder of the agency’s protection moderately than beat it.
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Right here is the element that stands out.
The brand new $490 goal nonetheless sits beneath the place Ciena (CIEN) traded going into the report, close to $620.
Marshall’s logic is {that a} inventory that has greater than doubled since final quarter already carries a lot of the excellent news in its worth.
What Ciena does and why its quarter triggered a goal stampede
Ciena builds the optical networking gear that carries information over lengthy distances and, more and more, between and inside information facilities.
As AI pushes huge volumes of information between chips and services, demand for that gear has surged.
For the fiscal second quarter ended Could 2, income hit $1.57 billion, up 40% from a 12 months earlier, and adjusted earnings reached $1.64 per share, almost 4 occasions the year-ago degree, in accordance with Ciena’s earnings release.
Direct cloud income grew 70% and accounted for 46% of gross sales, whereas the backlog climbed previous $7.7 billion, Ciena’s investor presentation confirms.
Administration then guided full-year income to about $6.3 billion, a 32% enhance, up from its prior 28% goal.
Numbers like that specify why analysts scrambled to replace their targets.
Why Ciena’s inventory fell about 17% even after a file quarter
The selloff got here all the way down to one phrase: provide.
