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As expected, much of the late-2009 selling of broadband/bandwidth play Ciena Corp (CIEN), which I first wrote about on May 19, 2009 at a price of $11.27, was year-end profit taking, with the shares since staging a nice recovery in early 2010, and I still like the shares here. Look for Ciena to post a healthy 15-18%, driven by the optical/broadband demand recovery, and not including likely, accretive results stemming from its pending $521 million acquisition of Nortel's Metro Ethernet Networking business.
Further, Ciena's diverse client list and a roughly 40% international sales mix adds to the positive story. In addition, the fact that communications giant AT&T (T) accounts for 20% of sales adds an element of revenue stability: Ma Bell isn't going away any time soon. The First Call FY2010/FY2011 EPS estimates for CIEN are a loss of 4 cents to a profit of 35 cents.
Technically, as noted, Ciena's stock, as expected, bottomed at/near $11, and has since moved above the key, 50-day moving average, and according my analysis it's poised to trend higher.
2010 Outlook: I view Ciena as a long-term play, but if investors are looking to sell CIEN within the year, it's probably best to take your profits after it rises to $18-19, if it fails to clear $20.
Stock Analysis: I consider Ciena Corp to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in CIEN now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my CIEN position before April 2010 and I'd put a sell/stop loss at: $9.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Technically, as noted, Ciena's stock, as expected, bottomed at/near $11, and has since moved above the key, 50-day moving average, and according my analysis it's poised to trend higher.
2010 Outlook: I view Ciena as a long-term play, but if investors are looking to sell CIEN within the year, it's probably best to take your profits after it rises to $18-19, if it fails to clear $20.
Stock Analysis: I consider Ciena Corp to be a moderate-risk stock. If an investor has already purchased the company's shares, I'd hold them. If not, I'd consider buying a 50% position in CIEN now; then buy another 25% in one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, I wouldn't buy more than 75% of my CIEN position before April 2010 and I'd put a sell/stop loss at: $9.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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