Ciena (CIEN) Moves 9.2% Higher: Will This Strength Last?

Ciena (CIEN) shares rallied 9.2% in the last trading session to close at $194.7. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 0.4% loss over the past four weeks.

The increase in share price can be attributed to surging AI-driven demand, with record orders and major wins in AI infrastructure and data center management. Increased network traffic, higher demand for bandwidth, and adoption of cloud architectures remain key growth drivers as the company expects to improve its profitability with a balanced mix of new and existing customers. Cloud providers are accelerating their AI spending, with over $7 trillion projected by 2030, and a rising share for networking. It is prioritizing high-speed optical and interconnect solutions, targeting 17% revenue growth in fiscal 2026. Ciena expects to hit its 15-16% operating margin target in fiscal 2026, a year ahead, driven by leverage and margin gains. However, tariff volatility, rising costs and stiff rivalry are woes. 

This developer of high-speed networking technology is expected to post quarterly earnings of $0.76 per share in its upcoming report, which represents a year-over-year change of +40.7%. Revenues are expected to be $1.28 billion, up 14.1% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Ciena, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CIEN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Ciena is part of the Zacks Communication - Components industry. Ooma (OOMA), another stock in the same industry, closed the last trading session 0.8% higher at $10.97. OOMA has returned -4.1% in the past month.

For Ooma, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.22. This represents a change of +29.4% from what the company reported a year ago. Ooma currently has a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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