Ciena's stock advanced on Thursday after the optical networking company unveiled ambitious long-term financial targets at its investor forum, with multiple Wall Street firms promptly raising their price targets in response.
Shares touched an intraday high of $375.70 before paring gains, trading about 4% higher at $357.35 in afternoon activity.
The company guided to a compound annual growth rate of roughly 30% in revenue from fiscal 2026 through fiscal 2029, implying approximately $14 billion in revenue by the end of that period. Management also projected an adjusted gross margin near 50% and a free cash flow margin of 20% by fiscal 2029.
Barclays analyst Tim Long noted that the long-term framework implies about $14 billion in fiscal 2029 revenue. He emphasized that management's outlook incorporates a conservative view of inside-the-data-center opportunities, and that the fiscal 2027 guidance represents a "supply floor," suggesting potential upside if component availability improves. Long also pointed to fiscal 2029 operating margin guidance of 32% to 35%, which would mark a new profitability level as revenue scales and Ciena's products become more integral to network infrastructure.
TD Cowen reiterated a Buy rating and a $400 price target, highlighting the company's projected revenue growth and margin trajectory. The firm also underscored Ciena's technology strengths in mixed-signal analog expertise and systems-level optimization for connectivity infrastructure, spanning from rack-level connectivity to continental-scale networks.
The bullish sentiment is largely driven by surging demand from AI data centers. While telecom carriers have trimmed orders, hyperscale operators like Meta Platforms and Alphabet—Ciena's largest data-center customers—are expanding their infrastructure, boosting demand for optical transport equipment. This trend aligns with the broader push in AI optical networking, as seen with peers like Lumentum.
Several firms raised their price targets following the forum. Barclays lifted its target to $548 from $475, maintaining an Overweight rating. Northland increased its target to $550 from $500, keeping an Outperform rating, and noted the new targets imply earnings power exceeding $25 per share. Morgan Stanley raised its target to $450 from $425, retaining an Equal Weight rating, while Rosenblatt reiterated a Buy rating and a $525 target.
Morgan Stanley said the multi-year targets were roughly 10% ahead of consensus EPS expectations, but the firm wants to see additional quarters of new product flow before becoming more constructive. It identified gross-margin expansion as a potential catalyst.
According to Koyfin data, 14 of 20 analysts covering Ciena rate the stock Buy or Strong Buy, with six rating it Hold.
Rosenblatt also said Ciena's demand commentary was positive for Nokia, which could qualify as a second optical data-center interconnect supplier. Nokia shares were up 4% at the time of writing.
Supply constraints remain a lingering factor, with management highlighting continued component shortages that could temper near-term growth. However, the long-term outlook appears robust, supported by the accelerating AI infrastructure buildout.
This article is for informational purposes only and does not constitute financial advice.
