Bank of America Upgrades Ciena Corp

Investing.com — Bank of America has upgraded Ciena Corp (NYSE: CIEN) from "neutral" to "buy," raising its price target from $70 to $95 due to improving demand and stronger long-term growth prospects.

BofA highlighted steady demand from North American service providers and an increase in orders from companies that build large-scale data centers, known as hyperscalers, which are fueling the need for more advanced networking equipment.

The bank now expects Ciena’s revenue to grow by 9.5% in fiscal 2025, up from its previous estimate of 8%. Ciena is positioned favorably in the optical networking market, boasting a 60% share of critical high-speed networking equipment. Hyperscalers are projected to contribute over 30% of Ciena's revenue in 2025, with further growth anticipated from services like underwater internet cables and managed fiber networks.

However, the company fell short of its profit and margin targets for the fourth quarter and is predicting only a modest 1% revenue increase in the first quarter of 2025. Ciena’s profitability has been affected by changes in product demand; nonetheless, management expects improvements with higher sales and new product launches by 2027.

Despite the quarterly shortfall, BofA views Ciena’s long-term growth potential as a key reason for the upgrade and the elevated price target.