Ciena (CIEN) stock fell Tuesday after the maker of optical communications gear signaled a slowdown in business from cloud data centers.
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The Hanover, Md.-based company early Tuesday reported fiscal second-quarter results that beat Wall Street’s targets on the top and bottom lines.
Ciena earned an adjusted 74 cents a share, up 48% year over year. That’s on sales of $1.13 billion, up 19%, in the quarter ended April 29. Further, analysts polled by FactSet had expected earnings of 61 cents a share on sales of $1.09 billion.
In morning trades on the stock market today, Ciena stock tumbled 11.1% to 42.22.
Ciena Stock Tanks After Report
Softer-than-expected sales to large internet service providers, or “web-scale” firms, overshadowed Ciena’s second-quarter beat, JPMorgan analyst Samik Chatterjee said in a note to clients. Sales to web-scale firms fell 2% from the first quarter, he said.
“While aggregate performance is a positive, the sequential revenue moderation in web-scale is worth highlighting, as it could be indicative of weaker demand trends from the customer vertical, which has already been well telegraphed but could still raise additional concerns in relation to orders and subsequently growth next year,” Chatterjee said.
Chatterjee rates Ciena stock as overweight, or buy, with a price target of 67.
Customers build Ciena’s gear into telecom networks and hyperscale data centers. Also, the company competes against Infinera (INFN) and Cisco Systems (CSCO).
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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