I'm reiterating my Buy rating for Ciena Corp. (NASDAQ: CIEN), first recommended on May 19, 2009, at a price of $11.27.
Given the likely U.S. recovery, increased demand for bandwidth in the quarters/years ahead will more than offset any near-term sales weakness, which is good news for bandwidth provider Ciena.
Technically, CIEN is overbought short-term, so investors should wait for a pull-back to $14-15, if given the chance: keep in mind CIEN may not treat to that level. Otherwise, CIEN's longer-term technical chart is strong, with the stock consistently above its 50-day moving average.
The First Call FY2009/FY2010 EPS estimates for CIEN are a loss of 46 cents to a profit of 11 cents. Sell/stop loss raised to $9 from $4.
Stock Analysis: Ciena is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in CIEN now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your CIEN position before December 2009. Sell/stop loss if you were to buy shares in this company: $9.
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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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