MKM Reiterates Buy On Ciena Following 'Strong' Earnings

MKM Partners' Michael Genovese reiterated Ciena Corporation (NYSE: CIEN)'s Buy rating, holding his price objective of $26 after the company beat earnings and guidance estimates last week.

"We are comfortable with Ciena's ability to expand margins over the next couple of years from already solid levels," said the analyst.

Genoverse was most impressed with the company's strong revenues from the Asia-PAC and Caribbean/Latin American regions, beating his estimates by taking advantage of growing demand. "The company did an excellent job growing its Packet Networking product sales, capitalizing on strong secular demand for Carrier Ethernet 2.0 and operating margin was 1 percent ahead" of estimates.

Additionally, the analyst remained confident Verizon Metro 100G revenues would ramp in 2HFY16, "but to be fairly small in July and become more significant in October." While Cisco (NASDAQ: CSCO) has been awarded most of the dense Northeast population, where circuit emulation technology is needed, Ciena has been awarded large stretches of the West and Midwest "where Optical transport over distance is more prized" stated the analyst. Genoverse noted Verizon revenues should be "roughly 50/50" between Ciena and Cisco.

At time of writing, Ciena was trading up 1.09 percent at $21.26.