BloggingStocks

Early analyst calls (Q) (CIEN) (LLY)

Douglas McIntyre — 2008-08-11T07:27:00+00:00

Filed under: Ciena Corp (CIEN), Lilly (Eli) (LLY), Qwest Communications Intl (Q)

UBS downgraded SunPower (NASDAQ:SPWR) to Neutral from Buy, according to Briefing.com. The news service also reports that Citigroup upgraded Qwest (NYSE:Q) to Buy from Hold and Morgan Keegan upgraded Ciena (NASDAQ:CIEN) to Outperform from Market Perform.

Eli Lilly (NYSE:LLY) was raised to Neutral at HSBC, according to 24/7 Wall St. The financial site also reports that American Electric Power (NYSE:AEP) was cut to Neutral at JPMorgan.

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Worst 10-year performers: Ciena Corporation's still waiting for that telecom turnaround

Elizabeth Harrow — 2008-08-01T13:14:00+00:00

Filed under: Major movement, Bad news, Ciena Corp (CIEN), S and P 500, Technology

In this series, we take a look at the 25 stocks on the S&P 500 Index (SPX) that have turned in the worst performance during the past decade -- what went wrong, and what happens next.

Among telecom stocks that got smacked during the past decade, Ciena Corporation (NASDAQ: CIEN) took the hardest hit -- at least, among those companies that still exist in the same incarnation. Yes, that comment was directed at you, Alcatel-Lucent (NYSE: ALU).

Other telecom losers on our roster include Qwest Communications (NYSE: Q), JDS Uniphase (NASDAQ: JDSU), and Tellabs, Inc. (NASDAQ: TLAB) -- the latter of which also plays a key role in the forthcoming Ciena saga.

What went wrong? At number 3 on our list of SPX laggards, CIEN lost 90% of its value in the decade that ended June 30, 2008. The stock peaked at a split-adjusted $1,057 in October 2000, a zenith that marked the top of a steep ascent. The equity's ensuing plunge would be just as dramatic.

When Ciena Corporation debuted in February 1997, it did so as the largest stock offering by a start-up company in history. The shares soared so quickly on their first day of trading, they attained a market capitalization of $3.44 billion overnight. Not too shabby -- particularly for a start-up with just three customers to depend on (foreshadowing alert!).

In June 1998, Tellabs announced that it would acquire Ciena for $7.1 billion in stock. A few months later, both companies saw their share price plunge when Ciena warned that the delay of a large order by one of its customers would slash its third-quarter earnings by more than half. Speculation hit the Street immediately that Tellabs would pull its buyout bid off the table.

Less than an hour before both companies were scheduled to hold shareholder meetings to vote on the deal, in August 1998, AT&T (NYSE: T) announced it would not do business with Ciena. Previously, analysts had expected Ma Bell to buy some $100 million in equipment from the start-up. It was a crushing blow for CIEN, which shed 62% during August 1998. By September, Tellabs had decided to walk away from the acquisition.

The company dusted itself off and managed to rebound during the next few years -- but, by the end of 2000, industry-wide suffering eventually caught up. The shares plunged 38% in March 2001 after the firm swallowed a second-quarter loss of $50.7 million and warned of a third-quarter shortfall. Sales for the period more than doubled, but operating costs had roughly tripled. With its own acquisition hopes dashed, Ciena had turned instead to buying other companies, and racked up quite a tab in the process.

Ciena eventually scored an AT&T contract in May 2001, but by then, sector-wide pressures were inescapable. In August, the company warned that profits for 2001 and 2002 would fall short of estimates due to waning demand. By November, Ciena was forced to trim its payroll to control costs; further job cuts were announced the following January, along with another profit warning.

In May 2002, investors learned that the company took a massive quarterly loss as demand for its products continued to evaporate. Ciena's chief executive, Gary Smith, didn't even bother to feign optimism. He admitted, "We cannot pretend to know when the telecommunications industry will recover."

What next? You can't fault Smith for his candor; as predicted, quarterly losses continued to roll in for years. More recently, Ciena's performance has improved. In each of the past 4 reporting periods, the company's profit has exceeded analysts' expectations, according to First Call.

Unfortunately, this doesn't necessarily mean the stock is doing well. CIEN tapped a new annual low of $19.30 as recently as July 16, when Credit Suisse handed out downgrades across the telecom sector. CIEN was dropped from "outperform" to "underperform," as the brokerage firm warned that a reduction in capital spending by carriers could pressure equipment suppliers. And, on July 18, the company warned investors it would take an unadjusted third-quarter loss of $5 million to $6 million based on its holdings in two structured investment vehicles, or SIVs.

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the weekly video series Option Basics on SchaeffersResearch.com.

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ADC Telecommunications (ADCT): Price defines bullish 'flag' pattern

Larry Schutts — 2008-06-10T15:10:00+00:00

Filed under: Earnings reports, Analyst upgrades and downgrades, Ciena Corp (CIEN), Morgan Stanley (MS), Verizon Communications (VZ), Technical Analysis, Stocks to Buy

ADC Telecommunications (NASDAQ: ADCT) provides infrastructure equipment used by wireline, wireless, cable, broadcast and enterprise networks. Its systems connect high-speed Internet, data, video and voice services to residential, business and mobile subscribers. The firm also provides network management software and integration services. Ciena (NASDAQ: CIEN), Morgan Stanley (NYSE: MS) and Verizon Communications (NYSE: VZ) are on the company's customer list.

The firm surprised the Street last week, when it reported Q2 EPS of 39 cents and revenues of $403.4 million. Analysts had been looking for 30 cents and $384.8 million. Management also guided Q3 revenues to about $403.4 million ($395.70 million consensus), FY08 EPS to $1.25-$1.33 ($1.21 consensus) and FY08 revenues to $1.52-$1.54 billion ($1.5B consensus). Friedman Billings, Robert W. Baird, UBS and Deutsche Securities subsequently reiterated "buy" ratings on the shares. Lehman Brothers reiterated its "equal weight". All five firms boosted their price targets to the $18.50-$20.00 range.

The stock popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with seven "strong buys", five "buys" and six "holds". The stock's Price to Sales ratio (1.49), Price to Book ratio (2.06), Price to Free Cash Flow ratio (22.67) and Sales Growth rate (19.17%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 89% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $11.59 and $21.06. A stop-loss of $14.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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Earnings highlights: Wal-Mart, Lehman Bros., Take-Two, Ciena, Trina Solar and others

Trey Thoelcke — 2008-06-07T09:10:00+00:00

Filed under: Earnings reports, Wal-Mart (WMT), Diageo plc (DEO), Ciena Corp (CIEN), Wachovia Corp (WB), Wells Fargo (WFC), Trina Solar ADS (TSL), Lehman Br Holdings (LEH), Potash Corp. of Saskatchewan (POT)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

Bob Evans Farms Inc. (NASDAQ: BOBE) posted stronger-than-expected Q4 earnings.
Ciena Corp. (NASDAQ: CIEN) beat earnings expectations, but share prices slipped anyway.
Daktronics Inc. (NASDAQ: DAKT) Q4 results beat expectations and it raised its revenue outlook.
Diageo (NYSE: DEO) is recession-proof and should deliver solid results, predicts one adviser.
Donaldson Company Inc. (NYSE: DCI) beat Q3 expectations and raised its full-year guidance.
Ensco International Inc. (NYSE: ESV) was upgraded because of its earnings growth potential.
Lehman Brothers Holdings Inc. (NYSE: LEH) earnings prospects don't impress Jim Cramer.
Netezza Corp. (NYSE: NZ) beat Q1 expectations and offered full-year revenue guidance.
Potash Corp. (NYSE: POT) earnings are "set to soar" says one analyst, due to rising demand and prices.
Sherwin-Williams Co. (NYSE: SHW) lowered its Q2 and full-year forecasts, sending shares down.
Take-Two Interactive Software Inc. (NASDAQ: TTWO) beat Q2 estimates on Grand Theft Auto IV demand.
Trina Solar Ltd. (NYSE: TSL) beat Q1 estimates but shares fell on the disappointing Q2 outlook.
Wal-Mart Stores Inc. (NYSE: WMT) was upgraded due to its earnings outlook and increased productivity.

Also, continued real estate losses are expected to hurt the quarterly reports of banks such as like Wachovia (NYSE: WB), Wells Fargo (NYSE: WFC), and National City (NYSE: NCC). And Steven Mallas wonders why Playboy (NYSE: PLA) shares have tanked since its last earnings report.

Upcoming results to watch for include Krispy Kreme (NYSE: KKD), Pall Corp. (NYSE: PLL), Pep Boys (NYSE: PBY), Korn Ferry (NYSE: KFY), and Casey's General Stores (NASDAQ: CASY).

Visit AOL Money & Finance for more earnings coverage.

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Closing bell: Retail and tech ignore woes and oil gains

Jon Ogg — 2008-06-05T16:09:00+00:00

Filed under: Wal-Mart (WMT), Ciena Corp (CIEN), Verizon Communications (VZ), Contl Airlines'B' (CAL), Broadcom Corp'A' (BRCM)

Shares were higher today after the weekly jobless claims were reported as 357,000, down 18,000 from last week. While new claims are down, the four week average of those filing for benefits was up to 3.086 million, the highest level since March 2004. The good news is that the markets largely ignored that S&P downgrade of bond insurers today. The stock market even ignored a $5.00 rise per barrel in oil today. Here are the unofficial closing levels today:

DJIA 12,598.10 (+207.62)
S&P500 1,403.30 (+26.10)
NASDAQ 2,549.94 (+46.80)
10YR-TNote 4.03% +(0.09%)
52-WEEK LOWS
TOP 10 ANALYST CALLS

Broadcom Corp. (NASDAQ: BRCM) was an example of just how strong today was by being up almost 3% at $28.90 late in the day. If you read trough the co-founder and former CEO's indictment charges you might think shareholders would have gone the other way.

Ciena Corp. (NASDAQ: CIEN) was the disappointment of the day. The company was up early on after beating earnings, but it slid lower after its call and shares were down a sharp 8% at $27.97 in the final minutes of the day.

Continental Airlines Inc. (NYSE: CAL) announced it was cutting capacity and would shed about 3,000 jobs. Its shares were up almost 5% at $15.20 in the final minutes of the day.

Verizon Communications Inc. (NYSE: VZ) confirmed that Verizon Wireless was acquiring Alltel and its 13+ million wireless subscribers for some $28.1 Billion, and shares were up over 5% at $39.01 in the final minutes today.

Wal-Mart Stores, Inc. (NYSE: WMT) was up 3.5% to $59.71 after the company posted strong same store sales gains on the day. The one issue this highlights is the "trading down" in America.

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Option Update: National Semiconductor and Ciena volatility up into EPS

Paul Foster — 2008-06-03T09:45:00+00:00

Filed under: Ciena Corp (CIEN), Options

National Semiconductor (NYSE: NSM) is scheduled to release Q4 after the close of trading on June 5.

RBC Capital Markets has a price target of $18 on NSM.

NSM June option implied volatility is at 46; July is at 40 above its 26-week average of 38 according to Track Data, suggesting larger price movement.

Ciena (NASDAQ: CIEN) closed at $29.97 Monday. CIEN is scheduled to report Q2 EPS on June 5.

Bank of America has Neutral rating with a $32 price target on CIEN.

CIEN June option implied volatility of 65 and July option implied volatility of 57 is above its 26-week average of 55 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Earnings expectations: Take-Two, Lululemon, Williams-Sonoma, Toll Bros. and others

Trey Thoelcke — 2008-06-02T16:37:00+00:00

Filed under: Earnings reports, Forecasts, Ciena Corp (CIEN), Toll Brothers (TOL), Smithfield Foods (SFD)

Here's a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report quarterly results in the first week of June, 2008.

The following companies are expected to post earnings growth, compared to the same period in the previous year:

Take-Two Interactive (NASDAQ: TTWO) up 136.6% (from a loss) to $1.12 per share, on $499.1 million in revenue
Lululemon Athletica Inc. (NASDAQ: LULU) up 58.3% to 12 cents per share, on $71.8 million in revenue
Vimpelcom Communications (NYSE: VIP) up 54.2% to 59 cents per share, on $2.1 billion in revenue
Focus Media Ltd. (NASDAQ: FMCN) up 36.4% to 33 cents per share, on $161.3 million in revenue
Ciena Corp. (NASDAQ: CIEN) up 29.7% to 37 cents per share, on $238.4 million in revenue
Greif Inc. (NYSE: GEF) up 24.1% to 87 cents per share, on $839.9 million in revenue
Vail Resorts Inc. (NYSE: MTN) up 18.4% to $2.44 per share, on $474.8 million in revenue
Guess? Inc. (NYSE: GES) up 17.4% to 46 cents per share, on $451.6 million in revenue
Del Monte Foods Co. (NYSE: DLM) up 15.4% to 26 cents per share, on $1.0 billion in revenue
Cooper Companies Inc. (NYSE: COO) up 14.6% to 48 cents per share, on $256.7 million in revenue
Jackson Hewitt Tax Service Inc. (NYSE: JTX) up 1.9% to $2.08 per share, on $161.6 million in revenue

These companies are expected to report declines in earnings:

Collective Brands Inc. (NYSE: PSS) down 1.7% to 58 cents per share, on $935.9 million in revenue
National Semiconductor Corp. (NYSE: NSM) down 3.6% to 27 cents per share, on $449.5 million in revenue
Midas Group Inc. (NYSE: MDS) down 4.0% to 24 cents per share, on $48.9 million in revenue
Bob Evans Farms Inc. (NASDAQ: BOBE) down 4.7% to 40 cents per share, on $441.5 million in revenue
Comtech Telecommunications (NASDAQ: CMTL) down 21.1% to 56 cents per share, on $129.5 million in revenue
Rex Stores Corp. (NYSE: RSC) down 50.9% to .25 cents per share, on $57.0 million in revenue
Smithfield Foods Inc. (NYSE: SFD) down 82.4% to 6 cents per share, on $3.5 billion in revenue
Williams-Sonoma Inc. (NYSE: WSM) down 93.8% to 1 cent per share, on $778.8 million in revenue

And these companies are expected to report losses:

Hovnanian Enterprises Inc. (NYSE: HOV) $2.68 per share, on $778.8 million in revenue
Amerco (NASDAQ: UHAL) $1.15 per share, on $485.5 million in revenue
Toll Brothers Inc. (NYSE: TOL) 86 cents per share, on $808.9 million in revenue
IDT Corp. (NYSE: IDT) 28 cents per share, on $470.5 million in revenue
Plato Learning Inc. (NASDAQ: TUTR) 18 cents per share, on $16.3 million in revenue

For a more thorough look at what to expect from the results of some of these companies, check out Andrew Horowitz's The week in preview: No place like home.

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Analyst initiations: NYB, GU and CEDC

Eric Buscemi — 2008-03-13T11:50:00+00:00

Filed under: Analyst reports, Ciena Corp (CIEN), Analyst initiations

MOST NOTEWORTHY: New York Community Bancorp, Gushan Environmental and Central European Distribution were today's noteworthy initiations:

Citigroup believes New York Community Bancorp (NYSE: NYB) is uniquely-positioned to benefit from the current operating environment and expects loan growth, NIM expansion, and good credit to boost EPS growth over the next year. The firm initiated shares with a Buy rating and $19 target.
Oppenheimer said Gushan Environmental (NYSE: GU) benefits from the Chinese government's policies encouraging growth of renewable fuels; shares were initiated with an Outperform rating and $14 target.
Jefferies initiated Central European Distribution (NASDAQ: CEDC) with a Buy rating and $66 target and views the company as a pure play on rising disposable incomes, particularly in Poland where it is headquartered.

OTHER INITIATIONS:

Lehman assumed Ciena (NASDAQ: CIEN) with an Overweight rating and $35 target.
BMO Capital started Millenium Pharma (NASDAQ: MLNM) with an Outperform rating and $18 target.
Keefe Bruyette started Meridian Interstate Bancorp (NASDAQ: EBSB) with an Outperform rating and $11.50 target.

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Earnings highlights: Ciena, Staples, Intel, Tivo, Trump, Del Monte and others

Trey Thoelcke — 2008-03-08T16:10:00+00:00

Filed under: Earnings reports, Intel (INTC), Ciena Corp (CIEN), Trump Entertainment Resorts (TRMP), Staples Inc (SPLS)

Here are a few highlights from this past week's earnings coverage from BloggingStocks:

BJ's Wholesale Club Inc. (NYSE: BJ) beat fourth-quarter estimates on lower costs and strong sales.
Ciena Corp. (NASDAQ: CIEN) first-quarter profit doubled on strong sales, lifting the sector.
Clean Harbors Inc. (NASDAQ: CLHB) trounced expectations as it completes acquisitions.
Del Monte Foods Co. (NYSE: DLM) beat estimates on cost cutting and raised its guidance.
HSBC Holdings PLC ADS (NYSE: HBC) profit soared in 2007, beating analysts' expectations.
Intel Corp. (NASDAQ: INTC) lowered its first quarter earnings forecast, citing weak chip prices.
LeapFrog Enterprises Inc. (NYSE: LF) narrowed its losses for the fourth quarter and full year.
LKQ Corp. (NASDAQ: LKQX) beat fourth-quarter estimates and raised its guidance.
Midway Games Inc. (NYSE: MWY) widened its losses in both the fourth quarter and full year.
Staples Inc. (NASDAQ: SPLS) reported a solid fourth quarter and increased its annual dividend.
TiVo Inc. (NASDAQ: TIVO) posted a smaller-than-expected fourth-quarter loss due to licensing deals.
Trump Entertainment Resorts Inc. (NASDAQ: TRMP) fourth-quarter and full-year losses widened.
Universal Health Services (NYSE: UHS) beat earnings expectations but matched revenue estimates.

Also, Dell Inc. (NASDAQ: DELL) struggles to maintain profitability against competitor Hewlett-Packard Co. (NYSE: HPQ). See Timothy Sykes's take on Warren Buffett's annual letter to Berkshire Hathaway (NYSE: BRK.A) shareholders. And Zac Bissonnette is interested in where earnings actually come from.

Upcoming results to watch for include Kroger Co. (NYSE: KR), Boston Beer Co. (NYSE: SAM), J. Crew Group Inc. (NYSE: JCG), Jones Soda Co. (NASDAQ: JSDA), Blackstone Group (NYSE: BX), and Men's Wearhouse Inc. (NYSE: MW).

Visit AOL Money & Finance for more earnings coverage.

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Ciena (CIEN) first-quarter profit rises on strong sales

Eliza Popescu — 2008-03-07T14:45:00+00:00

Filed under: Earnings reports, Forecasts, Ciena Corp (CIEN), Alcatel-LucentADS (ALU)

Shares of communications equipment maker Ciena Corp. (NASDAQ: CIEN) have been surging today following announcing that its first-quarter profit more than doubled, helped by higher networking equipment sales. Its surprising earnings numbers and also a positive sales outlook gave a lift to the entire sector, whose shares have been rallying in early trading.

For the quarter, the company said that its profit rose to $28.8 million, or 28 cents per share as new products helped Ciena to "take share and gain additional customer traction." These numbers are up from $11.1 million, or 12 cents per share reported in the same period a year ago.

Included in the company's earnings figures was $7.7 million related to a patent litigation settlement. Excluding that, Sears earnings numbers would have come at $49.6 million, or 47 cents a share. Analyst, on average, expected the company show quarterly earnings of 40 cents per share.

Ciena posted a respectable growth of 38% for its first-quarter revenue which surged to $227.4 million from $165.1 million a year ago. This was above analysts' predictions for revenue of $226.5 million in the quarter, according to Thomson Financial.

Looking ahead, Ciena expressed its optimism over further gains and said it expects "no change in the fundamental drivers" of its business. The communications equipment maker forecast a rise of 27% for its fiscal 2008 revenue which implies a sales values of more than $779.8 million. Analysts predicted a gain of "only" 22% to $949.7 million for 2008 revenue.

Traders expressed their enthusiasm over the company's positive outlook and pushed telecommunication equipment makers higher in early trading. Thus, Alucatel-Lucent (NYSE: ALU) is up 2.20% to 5.54, AT&T Inc. (NYSE: T) is up 0.50% to 36.17, Verizon Communications Inc. (NYSE: VZ) is up 0.30% to 36.37.

Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.

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ADC Telecommunications (ADCT): Connecting Internet elements

Larry Schutts — 2007-12-17T14:25:00+00:00

Filed under: Earnings reports, Analyst upgrades and downgrades, Ciena Corp (CIEN), Morgan Stanley (MS), Verizon Communications (VZ), Technical Analysis, Stocks to Buy

The efficiency of high-speed Internet service depends on the excellence of its infrastructure components. An Eden Prairie, Minnesota firm is a leading manufacturer of reliable hardware for the industry, serving big name clients in over 130 countries.

The firm surprised the Street last week, when it reported fiscal Q4 EPS of 30 cents and revenues of $330 million. Analysts had been looking for 22 cents and $318.4 million. Management also guided FY08 EPS to $1.12-1.22, versus Street consensus of $1.17. Merriman Curhan Ford subsequently upgraded the shares to "buy", Friedman Billings reiterated its "outperform", and Robert W. Baird noted that the firm's conservative outlook sets the stage for further outperformance.

The stock pushed through moving average resistance on the news and then passed into the initial stage of a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with five "strong buys", two "buys" and fifteen "holds". The stock's Price to Sales ratio (1.63), Price to Book ratio (2.14), Price to Cash Flow ratio (11.11), Price to Free Cash Flow ratio (19.69), Sales Growth rate (24.11%) and EPS Growth rate (87.50%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 82% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $14.07 and $21.06. A stop-loss of $15.65 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

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Ciena (CIEN) falls on weak outlook

Brent Archer — 2007-12-13T11:58:00+00:00

Filed under: Major movement, Earnings reports, Forecasts, Bad news, Ciena Corp (CIEN), Options, Technical Analysis

CIENA Corp. (NASDAQ: CIEN) stock is falling this morning after the company has issued a sales forecast for 2008 that was below Wall Street's estimate. CIEN forecast that sales would rise 20% to $935.8 million, while Wall Street was expecting a rise of 21% to $945.4 million. CIEN also reported a fourth-quarter $13 million loss on a short-term investment known as an SIV. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CIEN.

After hitting a one-year low of $24.50 last November, the stock hit a one-year high of $49.55 in October. This morning, CIEN opened at $40.36. So far today the stock has hit a low of $37.23 and a high of $40.44. As of 11:10, CIEN is trading at $37.97, down $4.15 (-9.8%). The chart for CIEN looks bullish but deteriorating, while S&P gives the stock a 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider an April bear-call credit spread above the $55 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make a 5.3% return in 4 months as long as CIEN is below $55 at April expiration. Ciena would have to rise by more than 44% before we would start to lose money.

CIEN has not been above $50 at all in the past year, and shown resistance around $42.50 recently. This trade could be risky if the tech sector is strong in the coming months, but even if that happens, this position could be protected by resistance the stock formed between$45 and $50 over the past 3 months.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CIEN.

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Option update 12-5-07: Fannie Mae (FNM) cuts dividend, raises capital

Paul Foster — 2007-12-05T09:47:00+00:00

Filed under: Ciena Corp (CIEN), Federal Natl Mtge (FNM), Options

Fannie Mae (NYSE: FNM) -

FNM announced plans to issue $7 billion of non-convertible preferred stock and intends to reduce the quarterly common dividend to $0.35 from $0.50 cents. Goldman Sachs Co. says: "Capital raise foreshadows more losses." FNM overall option implied volatility of 65 is above its 26-week average of 40 according to Track Data, suggesting larger price fluctuations.

Ciena (NASDAQ: CIEN) -

CIEN is expected to report Q4 EPS within the next two weeks. CIEN December option implied volatility of 65 is above its 26-week average of 47 according to Track Data, suggesting larger risk.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Ciena's the company for broadband efficiency

Joseph Lazzaro — 2007-12-04T17:37:00+00:00

Filed under: Internet, Ciena Corp (CIEN), Stocks to Buy

Just call Ciena the company that's covering the communication services spectrum.

Ciena (NYSE: CIEN) supplies application-focused communications equipment, software and services to communications service providers, cable operators, and governments.

Analysts really like two dimensions of Ciena's operations: Its optical networking products business, which helps service providers increase the efficiency and bandwidth of their communications networks; and its broadband networking products business.

Other positives: Most analysts see CIEN's 2008 revenue increasing about 15%-20%, with a 35%-40% revenue gain seen for this year. Analysts also expect the company to increase its market share of larger-customer accounts. The Reuters F2007/F2008 EPS consensus estimates for CIEN are $1.28/$1.72.

The risks? Analysts are keeping tabs on CIEN's competition, who may result in pressured margins moving forward; CIEN also remains vulnerable to the loss of a major customer.

The First Call mean rating for CIEN is: Buy. [22 firms.] Mean 2008 target: $48.10. [high: $55, low: $22.]

Stock Analysis: Ciena is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from CIEN's shares. Sell / Stop Loss if you were to purchase shares in this company: $26.

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Analyst upgrades: SNY, LIFC, MYL, PNRA and NHY

Eric Buscemi — 2007-10-04T10:45:00+00:00

Filed under: Analyst reports, Analyst upgrades and downgrades, Ciena Corp (CIEN), Rite Aid Corp (RAD)

MOST NOTEWORTHY: Sanofi-Aventis, Lifecell, Mylan Labs, Panera Bread and Norsk Hydro were today's noteworthy upgrades:

Societe Generale upgraded shares of Sanofi-Aventis (NYSE: SNY) to Buy from Hold as they believe pipeline maturation over the next 12 months can drive the stock higher.
Piper upgraded shares of Lifecell (NASDAQ: LIFC) to Outperform from Market Perform after their recent survey indicated that AlloDerm remains the leading biologic hernia mesh on the market and competition is making little headway.
JP Morgan upgraded Mylan Labs (NYSE: MYL), Panera Bread (NASDAQ: PNRA) and Norsk Hydro (NYSE: NHY) to Overweight from Neutral. The firm upgraded Mylan based on its position in the global generics market and above-average growth; Panera was upgraded on valuation, as they believe the recent operating risk is now behind the company; Norsk Hydro was upgraded, as they believe the value of the company's aluminum assets are higher than the current share price suggests.

OTHER UPGRADES:

HSBC upgraded Ride Aid (NYSE: RAD) to Neutral from Underweight.
UBS upgraded Standard Pacific (NYSE: SPF) and Ciena (NASDAQ: CIEN) to Neutral from Sell and Sherwin-Williams (NYSE: SHW) to Buy from Neutral.
Goldman added Cytec Industries (NYSE: CYT) to its Conviction Buy List.

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Analyst upgrades: GM, GMCR, OREX and NHY

Eric Buscemi — 2007-10-03T10:50:00+00:00

Filed under: Analyst reports, Analyst upgrades and downgrades, General Motors (GM), Ciena Corp (CIEN)

MOST NOTEWORTHY: General Motors, Green Mountain Coffee, Orexigen and Norsk Hydro were today's noteworthy upgrades:

Banc of America upgraded shares of General Motors Corporation (NYSE: GM) to Neutral from Sell as they believe the agreement with the United Auto Workers union offsets a worsening outlook for sales.
Piper Jaffray upgraded shares of Green Mountain Coffee Roasters (NASDAQ: GMCR) to Outperform from Market Perform after a meeting with management as they believe shares offer a compelling buying opportunity at current levels based on their 2009 estimates.
JMP Securities upgraded shares of Orexigen Therapeutics (NASDAQ: OREX) to Strong Buy from Market Outperform as they believe the company's lead product candidates, Empatic and Contrave, could become front-line therapies for obesity due to improved durability of efficacy, increased safety and tolerability, and lack of addiction.
Norsk Hydro (NYSE: NHY) was upgraded to Buy from Hold at Citigroup. The firm sees upside in the stock from the volume growth and further improvements in downstream operations.

OTHER UPGRADES:

Lehman upgraded Temple Inland (NYSE TIN) to Overweight from Equal Weight.
Ciena Corporation (NASDAQ: CIEN) was upgraded to Buy from Neutral at Merrill Lynch.
HSBC upgraded ENI SpA (NYSE: E) to Overweight from Neutral.
Nollenberger raised shares of Symyx Technologies (NASDAQ: SMMX) to Buy from Neutral.

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ADC Telecommunications (ADCT): Providing Internet connectivity

Larry Schutts — 2007-09-10T16:05:00+00:00

Filed under: Earnings reports, Ciena Corp (CIEN), Morgan Stanley (MS), Verizon Communications (VZ), Technical Analysis, Stocks to Buy

The firm surprised the Street last week when it reported fiscal Q3 EPS of 37 cents and revenues of $346.1 million. Analysts had been looking for 23 cents and $329.1 million. The CEO cited better than expected strength in the connectivity, wireless and services businesses. Management also guided FY07 EPS to $1.11-$1.15 (92 cent consensus) and FY07 revenues to $1.308-$1.313 billion ($1.29B consensus). The stock popped on the news and has since been forming a bullish "pennant" consolidation pattern. Equities frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with six "strong buys" and sixteen "holds." Analysts see a 19% growth rate, through the next year. The stock's P/E ratio (14.20), Price to Sales ratio (1.81), Price to Book ratio (2.40), Price to Cash Flow ratio (9.25), Price to Free Cash Flow ratio (26.89), EPS Growth rate (42.31%), Net Profit Margin (13.33%) and Return on Assets (10.53%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 79% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $13.40 and $21.06. A stop-loss of $17.25 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

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The buying opportunity we've all been waiting for in Ciena (CIEN)

Kevin Kelly — 2007-08-06T14:43:00+00:00

Filed under: Ciena Corp (CIEN), Verizon Communications (VZ), Technical Analysis, Level 3 Communications (LVLT), Stocks to Buy

Traders who follow theme plays are probably familiar with Ciena Corp. (NASDAQ: CIEN) -- a supplier of networking equipment. With the potential for margin expansion and continued sales growth, backed by a solid macro trend, this stock is certainly interesting. But for traders the stock hasn't offered a true buying opportunity in the last month. That is, until recently.

Let's start with the macro trend behind the stock -- the growth of the "triple play" offering. The triple play is voice, internet, and television services all over a single broadband connection. This model is becoming increasingly popular as consumers have gained interest in consolidating their monthly bills and using one provider they trust for a variety of services.

However, just because the triple play products use one broadband connection, the services aren't fully-supported by our current "bandwith" -- a technical term for the ability to transfer data. All internet users have become very aware of the prevalence of internet video if they regularly surf the internet. It seems like every website has become further and further involved in providing videos to their viewers. In addition, the growth of social networking sites like Facebook and YouTube have drastically increased the demand for bandwith.

As a result of this there is one obvious implication -- there is going to be clear demand for bandwith in coming years and we are going to watch the telecom companies, such as Verizon Communications (NYSE: VZ), "build-out" to enhance their bandwith capabilities.

I've already highlighted one company that I believe will benefit from this build-out, Level 3 Communications (NASDAQ: LVLT), however with the recent credit-raising issues I think the stock has become less attractive because of its acquisition-based strategy. That being said, I think the stock still has room to run as Level 3's recent slew of acquisitions become accretive.

Similarly, Ciena makes a variety of products that are used as companies build out their bandwith levels. While I'm not going to get into the technicalities of the company's products, I'd like to cover some of the basic fundamentals for the stock.

First and foremost, Ciena doesn't have the debt/credit-related issues that Level 3 has simply because of its incredible balance sheet. This factor alone, in my opinion, makes the stock drastically more attractive than Level 3, especially because of the potential headline risk facing Level 3.

Ciena also stands to show rapid growth in this year and through next year. This year the company stands to earn almost $1.15 per share according to my models -- slightly above the street's estimate of $1.11 per share. When comparing this to last year's 30 cents per share, the growth is clearly incredible. While this is certainly attributable to revenue growth (+37%), much of this growth is the result of margin improvements and the like.

Going into next year, I think the company is capable of earning $1.55-$1.60 per share, roughly in-line with the street's estimate of $1.54 per share. This slowdown in growth (year-over-year) is attributable to less margin expansion and decreased revenue growth. However, revenue growth should still clock in at more than 20%.

While I admit the stock is not very attractive on the valuation front, at 23x next year's earnings I think the street isn't going to re-price the stock on a valuation basis with the incredible macroeconomic and thematic tailwinds behind the stock.

More importantly for traders, the stock currently appears to be at an attractive buying point when looking at the chart:

First and foremost, the uptrend in the stock remains in-tact even after the market's recent sell-off. This is significant because many stocks managed to break their uptrends in the recent slide in stocks, even the S&P 500 itself.

In addition, I think the stock's current level is interesting for buying for a couple reasons:

The stock is currently sitting at the 50-day moving average and the bottom Bollinger band. To a person who doesn't follow technical analysis this probably doesn't mean much but the theory is that "dip buyers" tend to come in when a stock pulls back to its 50-day moving average. The bottom Bollinger Band tends to represent an oversold condition.
The stock is oversold according to the Stochastic oscillator. As I covered in a recent post, this tends to mean that the market has irrationally sold off the stock to an "oversold" condition, theoretically opening the opportunity to a bounce.

I believe that shorter-term traders would probably keep a stop within a point or two -- betting that the 50-day moving average holds. While intermediate-term traders would probably like to keep a loose stop in because this is a very volatile stock -- for example, the $32 range would make sense because the stock should have support around the gap-up level.

Adding it all up, I think the fundamental thesis behind Ciena makes tremendous sense. However, that doesn't mean the stock is attractive here. Despite the lack of undervaluation, I think the stock still has room to run from looking at the chart.

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More bad news for VoIP industry

Kevin Kelly — 2007-07-19T10:51:00+00:00

Filed under: Bad news, Consumer experience, Competitive strategy, Ciena Corp (CIEN), Level 3 Communications (LVLT), Vonage Holdings (VG)

When companies discontinue operations it's one thing, but when a company ceases operations without warning its customers something is fishy. When SunRocket did just this, red flags appeared in my head. Companies don't just close their doors one days for no reason, but it appears that SunRocket did just this:

"At the company's Tysons Corner headquarters, the phones went unanswered, the doors were locked and a cardboard sign with "Out of Business" scribbled on it hung inside the glass front door."

Obviously consumers who used the company's services were out of luck for the day, but it didn't stop there. In fact, many of these consumers paid for their services well in advance.

Although this seems like an isolated event, it casts further doubt on the entire VoIP industry. As a result, the primary VoIP provider in America, Vonage (NYSE: VG) is likely to lose some (more?) credibility. That being said, for many consumers the benefits VoIP offers over traditional phonelines are powerful enough to let them "roll the dice" once again. Some followers of this space who I spoke to are going as far as to say this could help Vonage because they will gain some of SunRocket's business, but I'm not sure about that and the impact wouldn't be significant because SunRocket's total customer base was about 10% of Vonage's current customer base.

However, if 8x8 (NASDAQ: EGHT) could pick up SunRocket's accounts, the stock would most certainly fly because of its small size - $82 million - and 8.7 short ratio.
The SunRocket news is a rather scary example of how consumers can suffer from purchasing products from an extraordinarily speculative company.

Going forward, I continue to believe the money in VoIP is going to be made betting on the infrastructure providing companies such as Ciena (NASDAQ: CIEN) and Level 3 (NASDAQ: LVLT). As it is painfully obvious from the chart on the right, investors who have been buying the VoIP providers have been struggling lately whereas those buying into the build-out providers have prospered. Anyone who has been reading my writing knows that I am a bull on both of these companies - for my take on LVLT click here and for CIEN click here.

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Is it ever OK to forget valuation?

Kevin Kelly — 2007-07-17T14:59:00+00:00

Filed under: Columns, Ciena Corp (CIEN), Under Armour'A' (UA), Level 3 Communications (LVLT)

Is it ever OK to forget valuation? Yes -- if you have the right mindset.

Once I learned how companies were valued, and how to value companies, I found it increasingly difficult to trade stocks that I may have found interesting before. The idea behind investing is that the stock market offers you businesses at premiums and discounts to their values. Obviously, to make money, you try to purchase the stocks with the deepest discounts and wait for the market to realize their value. However, this certainly has its flaws -- namely, you might have valued the company incorrectly. If you have too much conviction in this valuation, you can stand to lose a lot of money.

Trading is different from investing because you don't look at a stock as a business -- you look at it is a "stock." This mindset has its benefits over investing -- primarily the fact that money management becomes much easier because you can quickly cut losses without guilt.

Prior to learning about the concepts of value investing, I would guiltlessly trade in and out of stocks based on which sector was hot, momentum in earnings, and even momentum in price. And I happened to do well, but when another commitment came up (school) I was forced to shift to a more long-term mindset.

To this day, I still have trouble separating the mindsets of trading and investing and I often can't get myself to buy a hot momentum or story stock, although I've often found I would have made a profit. "If value investing is what many consider to be the tried and true way to beat the markets, why would you want to do anything different?" you might say, but I believe the answer to this is pretty simple -- value investing and passive, long-term investing gets boring. For someone who follows the markets on a daily basis, I'd like to speculate with a small percentage of my investing account and see if I can hit a home run.

A perfect example of the value stock vs. trading/momentum stock mindset can be displayed in a stock I covered yesterday, Under Armour (NYSE: UA). This stock certainly has tremendous trading momentum behind it, as well as interesting short-term potential due to the short-squeeze scenario. Yet, when looking at this stock as a business, one sees a painfully overvalued company with many issues likely to surface in the next 3-12 months due to margin contraction and price cuts. While I don't doubt that short-term traders can pull some more profits out of the stock, for long-term investors (much of this site's reader-base), I feel like the stock is too dangerous at these levels.

All this being said, I find myself being more interested in the trading space than usual lately for one simple reason: the market is on fire. In this market, finding value stocks on a regular basis is an incredibly difficult task. This is the best type of market for the momentum story stocks that I dabble in when trading.

If I could advocate one thing for trading, I'd preach learning about money management; learning when to cut losses, how to move stops, how to size positions, and the likes. While much of this can only come from experience, such as where to place a stop, many of these lessons can be learned from trading books.

I also have found it very helpful to always have a thesis for trades as to what is going to move the stock. I've made most of my outsized profits riding a high-growth momentum play in a popular sector. For example, following Level 3's (NASDAQ: LVLT) earnings report next Thursday, I think the company offers many characteristics of an interesting trade. It is in a very hot and interesting industry, it continues to make positive acquisitions, and the company is growing quickly. As an added bonus, I think the stock also has some interesting value properties.

Another interesting trade is Ciena (NASDAQ: CIEN). The stock is on fire, recently running from $25 per share to almost $40 per share. The company is growing rapidly: year-over-year sales growth is in the 37% range for this year, year-over-year earnings growth is roughly 250%. Ciena is benefiting extraordinarily from Verizon's network buildout. And throw in the fact that this company is also in a very popular sector as well as being parts of "vital to the triple play" according to Jim Cramer, and I think this one looks great.

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