Key insights
- Morgan Stanley maintained an Equalweight rating and $405 price target for Ciena (CIEN), noting bullish AI demand but profit-taking in outperformers. Despite Ciena's significant recent gains and high P/E, peer results suggest sustained optical and cloud strength. Supply constraints are expected to limit near-term margin upside. Upcoming earnings on June 4 could see significant stock movement, with analysts generally maintaining Buy ratings and raising price targets due to AI infrastructure demand.
Investing.com - Morgan Stanley reiterated an Equalweight rating on Ciena Corp. (NYSE:CIEN) shares and maintained its $405.00 price target.
The firm noted that demand commentary remained bullish at the Morgan Stanley Asia AI Summit this week, though investors appeared to be taking profits in crowded outperformers and rotating deeper into the AI supply chain. The profit-taking comes as Ciena shares have surged 599% over the past year and 179% in the last six months, trading at a P/E ratio of 360. InvestingPro data suggests the stock is currently overvalued relative to its Fair Value, placing it among stocks on the Most Overvalued list.
Morgan Stanley said peer results from Lumentum Holdings, Cisco Systems, Nokia and Coherent Corp. pointed to demand ahead of supply and sustained optical and cloud strength. The firm expects Ciena likely beats revenue by 3% to 5%, with third-quarter guidance potentially $50 million to $75 million above second-quarter levels, gated significantly by supply.
Supply constraints and mix likely limit gross margin upside near term, keeping stronger margin expansion more of a 2027 story, according to the firm.
The Equalweight rating indicates Morgan Stanley expects Ciena’s stock performance to be in line with the average total return of the stocks the firm covers. For deeper insights, InvestingPro offers 18 additional ProTips for CIEN, including comprehensive analysis through Pro Research Reports available for over 1,400 US equities.
In other recent news, Ciena Corp. is preparing to release its earnings on June 4, a date that could see the stock move significantly, as options data suggests a possible 13% shift. Analysts have been active in adjusting their outlooks for Ciena, with TD Cowen raising its price target to $675, citing strong optical demand, while maintaining a Buy rating. Similarly, Stifel increased its price target to $585, also maintaining a Buy rating, driven by the growing demand for AI infrastructure. BofA Securities followed suit, raising its price target to $550 from $355, highlighting the company’s increased backlog, which has grown by $2 billion to $7 billion. Rothschild Redburn initiated coverage with a Neutral rating and set a price target of $416, noting that while revenue and profit forecasts are above consensus, the current valuation poses challenges. These developments come as the company approaches its second-quarter fiscal 2026 earnings report, expected in early June. Analysts’ adjustments reflect the broader trends in the optical networking sector, particularly following insights from the OFC 2026 conference.
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