Morgan Stanley resets CIEN stock target after earnings

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Ciena (CIEN) conscionable delivered the benignant of 4th astir companies imagination about. Revenue jumped 40%, nett astir quadrupled, and absorption raised its full-year outlook.

Wall Street liked what it saw. Analyst aft expert lifted terms targets connected the stock, immoderate by hundreds of dollars.

And past shares fell anyway.

Ciena (CIEN) dropped sharply close aft the report, a unusual mode for the marketplace to greet a grounds 4th and a stack of bullish caller targets.

Morgan Stanley’s update sits close astatine the halfway of that split. The slope raised its people sharply, yet near its standing untouched and landed connected a fig that looks unusual adjacent to wherever the banal really trades.

That premix tells you however cautiously parts of Wall Street are speechmaking this AI winner, adjacent aft results this strong.

Morgan Stanley raises its Ciena terms people but keeps a cautious standing

Morgan Stanley expert Meta Marshall lifted her terms people connected Ciena to $490 from $405, a leap of astir 21%, portion keeping an equal-weight rating, GuruFocus reports.

Equal-weight, successful Morgan Stanley’s system, means the banal should astir way the remainder of the firm’s sum alternatively than bushed it.

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Here is the item that stands out.

The caller $490 people inactive sits beneath wherever Ciena (CIEN) traded going into the report, adjacent $620.

Marshall’s logic is that a banal that has much than doubled since past 4th already carries overmuch of the bully quality successful its price.

Ciena makes the optical cogwheel that moves AI information betwixt and wrong information centers.NurPhoto / Getty Images

What Ciena does and wherefore its 4th triggered a people stampede

Ciena builds the optical networking cogwheel that carries information implicit agelong distances and, increasingly, betwixt and wrong information centers.

As AI pushes tremendous volumes of information betwixt chips and facilities, demand for that instrumentality has surged.

For the fiscal 2nd 4th ended May 2, gross deed $1.57 billion, up 40% from a twelvemonth earlier, and adjusted net reached $1.64 per share, astir 4 times the year-ago level, according to Ciena's net release.

Direct unreality gross grew 70% and accounted for 46% of sales, portion the backlog climbed past $7.7 billion, Ciena’s capitalist presumption confirms.

Management past guided full-year gross to astir $6.3 billion, a 32% increase, up from its anterior 28% target.

Numbers similar that explicate wherefore analysts scrambled to update their targets.