Investing.com -- Ciena (NYSE: NYSE:CIEN) saw its shares rally around 13% Thursday after the networking company issued a better-than-expected long-term guidance.
Shares initially fell after Ciena reported fourth-quarter results that fell short of market expectations. However, Ciena stock quickly reversed its losses after the management said it expects FY25 and 3-year growth to be in the 8-11% range, which is higher than the prior target of 6-8%.
The firm posted Q4 earnings per share (EPS) of 54 cents, down from 75 cents a year earlier and below the consensus estimate of 65 cents.
Revenue for the period totaled $1.12 billion, down 0.5% year-over-year, and in line with consensus estimates of $1.1 billion.
"Our Q4 revenue and strong order flow reflect our significant and increasing technology leadership and positive industry dynamics," said Gary Smith, president and CEO of Ciena.
"As Cloud and AI drive bandwidth demand across the network, we are positioned for accelerated revenue growth and market share expansion moving forward."
Revenue from networking platforms was $859.0 million, a 2% year-over-year decrease but ahead of the $842.8 million estimate. Converged Packet Optical revenue showed strength, rising 4.2% to $779.6 million and exceeding the $728.5 million expected by analysts.
Adjusted gross margin fell to 41.6%, down from 43.7% last year and missing the 43.8% expected by analysts.
"We think CIEN could end-up with $5.0+ EPS run-rate over the next 3 years in a BULL CASE scenario and that could place the upside to >$100," Evercore ISI analyst Amit Daryanani said in a note.
"We are sticking with our In Line rating but raising our target to $85 (prior $65) to reflect higher EPS trajectory long-term (though we suspect FY25 EPS will come down on the street given lower GM vs. plan) – our rating reflects the current valuation and risk for this ramp to be more lumpy vs. linear."
Alongside results, Ciena has named Lawton W. Fitt as independent Chair of its Board of Directors, effective December 11, 2024.
Patrick H. Nettles, Ph.D., is stepping down as Executive Chair and will retire after his term ends at Ciena's 2025 Annual Meeting of Stockholders. He will remain on the Board until then to support Ms. Fitt's transition.