Ciena $CIEN Falling Returns on Capital, Downgrade

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Ciena $CIEN stock fell -2.6% in early trading on October 11, 2022, on a downgrade from Evercore.

Ciena downgraded to In Line at Evercore ISI on risk to 2023 IT demand

On October 11, 2022, Evercore ISI analyst Amit Daryanani downgraded Ciena to In Line from Outperform with a price target of $46, down from $56. Daryanani sees risk to calendar year 2023 estimates across most companies in his coverage as headwinds from the strong U.S. dollar, soaring energy prices in Europe, rising interest rates and more will probably temper expectations and companies’ outlooks. IT budgets, while strong for 2022, have risk for moderation into 2023 and a strong dollar will place further pressure on revenue expectations, said Daryanani. While September quarter results should be fine, he sees growing risk to December quarter and 2023 estimates.

Returns On Capital Paint a Concerning Picture

On October 10, 2022, Simply Wall St noted Ciena has an ROCE of 7.8%. On its own, that’s a low figure, but it’s around the 8.7% average generated by the Communications industry. More troubling, the ROCE trend at Ciena has been falling. Around five years ago the returns on capital were 11%, but since then they’ve fallen to 7.8%. Source:

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Ciena $CIEN Stock Technical Analysis

Ciena $CIEN stock is in a technical strong downtrend. Intermediate support lows were broken on October 11, 2022. The stock is in downtrend channels in both the intermediate and long-term time frames. The MACD is fading and the money flow is negative.

Ciena stock chart on October 11, 2022, in downtrend with fading MACD and negative money flow.
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