Ciena (CIEN) has broken out to a ten-year high after the company beat fourth quarter estimates, guided fiscal 2019 and first quarter revenue above consensus and raised its long-term earnings and revenue targets this morning.
The networking equipment and communications software company reported fourth quarter revenue and gross margins above its forecast even after excluding a one-time benefit from an accounting change.
Revenue growth accelerated to 19% (excluding the accounting change benefit) as orders hit a new record. Booking exceeded revenue as the backlog hit $1.26 billion
Ciena sees continued momentum across its business, benefiting from its leading market position and strong demand.
The company is seeing strong demand from webscale players, tier one telecommunications service providers and Asia, especially in India.
While not mentioned directly, Ciena seems to be a prime beneficiary of companies globally distancing themselves from Chinese telecommunications equipment provider Huawei.
Ciena guided first quarter and fiscal 2019 revenue above estimates. The company also raised its three-year financial targets: Revenue growth to 6-8% from 5-7% and adjusted EPS growth to over 20% from 14-16%.
After losing money from 2002 through 2012, Ciena returned to profitability on an adjusted basis in 2013. The company has since grown revenue almost 50% and appears well positioned as a telecommunications supplier going forward as software and adaptive solutions become more relevant.
The stock broke out to a ten year high in November before consolidating toward its 50-day moving average and then gapping up to a new high today.
With a $5 billion valuation, the stock trades at 19x earnings estimates for fiscal 2019.