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Author:

Jester Debunker

Subject:

News

Date:

12/06/19 at 8:17 AM CST

 

 

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Sentiment:

Neutral

CIEN downgraded to SELL by UBS

CIEN downgraded to SELL by UBS

Down 5% in the pre-market. Why are they lowering from $43 to $31, what the hell?

"Ciena shares are trading lower after UBS downgraded the company's stock from Neutral to Sell and lowered the price target from $43 to $31."

Jester + lt cap,

Yes, 'negative' doesn't begin to describe how hated CIEN just became by UBS. Obviously, earnings on Dec. 12th will be critical - either it will make UBS look foolish or prescient. If there's bad news, I'd expect other analysts to pile on. If one wants a fairly sunny take on CIEN, here's one from seeking alpha:

seekingalpha.com/ar...widget

I think it's been CIEN's own caveats in their last call that has hampered the stock. But punishing it down to these levels? It's tempting to buy but the boat is fairly loaded and UBS has spooked me a bit.


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Author:

Jam ok

Subject:

News

Sentiment:

Neutral

Date:

12/06/19 at 12:57 PM CST

Apparently the bad news that Arista Networks (ANET) delivered on October 31st is now being blamed for also contributing to a slow down on CIEN gear.  The culprit is Facebook if I remember correctly.

In ANET's case this led to a brutal day, its stock dropped from $244 to $185 overnight.


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Author:

LongTerm CapGains

Subject:

News

Sentiment:

Neutral

Date:

12/07/19 at 4:43 PM CST

lt cap,

Thanks for the contribution. I wonder what your take on how relevant Arista is to CIEN's business - but I guess we'll find that out on Thursday when they report. It's really kind of an 

interesting case - We've got CIEN's note of caution from their last CC, altho it was a great quarter, and we have UBS turning deadly negative on the stock. And there is both the question

of price competition that may cut margins, and (I think) the real rollout of 5g deployment is going to be a delayed, drawn-out process that will take longer than people thought. One source

I read said that full deployment may occur by around 2025. If all of that's true, and any part is hardily confirmed by the CC, those of us in the stock are going to be sorely disappointed, not

to mention hurt. If CIEN shows that a lot of these worries are not sector-wide, well, figure it out: We've seen stocks in the sector move 25% on good or bad news. 25% from about $35 would be $7. Which would propel the stock to about $42 - whoopee - far below the 15 or so (I'm using memory) analysts who rate the stock 'overweight', buy, or strong buy. So, you've got 15 bulls and 1 strong bear in UBS's sell. Is the guy prescient? He certainly has the latest report. Or is he a fool? Clearly, the market is spooked. I'm tempted to buy here and sell covered calls, as the stock seems oversold to me. But the premiums aren't worth the downside risk.

Funny that the market is in 'happy mode' with no trade deal in sight, impeachment in the offing, and President Cheetos as unpredictable and unknowledgeable as ever. But a stock like CIEN that has actually been delivering the goods gets whacked after a pretty darn good CC. Go figure. I think Apple has more risks, and it's at all time highs.

 


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Author:

Jam ok

Subject:

News

Sentiment:

Neutral

Date:

12/10/19 at 1:44 PM CST

I believe that Facebook slowing down purchases of equipment have had a negative sales effect on Arista as well as Ciena.  Not sure there are any other connections between Arista and Ciena.  Arista is a direct competitor of Cisco, not so much Ciena.

I presume the Facebook slowdown is for their Datacenters.


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Author:

LongTerm CapGains

Subject:

News

Sentiment:

Neutral

Date:

12/11/19 at 4:19 AM CST

Wow, quite the turnaround in CIEN. Apparently it was down 3.5% in the pre-market, now up 12%. I don't know what caused that change, but no doubt the up move was fueled by Trump claiming (yet again) that a big China deal is close, and the market believes him (yet again).


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Author:

Jester Debunker

Subject:

News

Sentiment:

Neutral

Date:

12/12/19 at 9:06 AM CST

CIEN expects to grow operating margin from current 13% to 16+% over 3 years and predicts 20% eps growth per year.  UBS jumped the gun. And it also doesn't hurt that folks bit on Trump's tweet.


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Author:

breinejm

Subject:

News

Sentiment:

Neutral

Date:

12/12/19 at 11:20 AM CST

 

This is what Barrons wrote on CIEN downgrade:

 

Ciena Stock Drops After Analyst Warns of More Trouble Ahead  By Alistair Bates Dec. 6, 2019 4:27 pm ET

UBS urged shareholders to sell their shares in Ciena, causing the stock to drop 3.5% Friday.

In a report released Friday, UBS analyst Tejas Venkatesh justified his pessimistic outlook by citing what he believes are signs of a fast-approaching downturn, something that could come as a surprise to investors after two years of consistent outperformance.

Ciena (ticker: CIEN) stock has gained 66% since the end of 2017, while the NASDAQ Composite has risen 25% and the S&P 500 has advanced 18%.

Although the telecommunications-equipment company has seen significant growth in revenue, this upward trajectory has been driven in large part by Facebook’s (FB) heavy spending, Venkatesh wrote. The social media service made up 13% of Ciena’s revenue last quarter. However, Venkatesh warns investors should expect this level of spending to decelerate and, with it, their shares to lose value.

“We are especially worried that decelerating networking spending at Facebook, which we believe was witnessed in Arista and Corning’s results, could also impact Ciena,” Venkatesh wrote in the note.

Arista Networks (ANET) stock plummeted in early November after the company released low fourth-quarter guidance. Having posted revenue of $654.4 million in the previous quarter, the company predicted that sales could fall to $540 million to $560 million in the fourth quarter. This was credited in a statement by CEO Jayshree Ullal to a sudden and substantial decrease in orders from a “specific cloud titan customer,” which is believed to be Facebook.

Venkatesh is apprehensive about spending cuts at U.S. telco titan AT&T (T), as well as at Indian companies Jio and Airtel, both of which have significantly reduced their capital expenditures. Such a cut in customer spending would stilt revenue growth and cause Ciena’s valuation to dive, Venkatesh argues.

The analyst maintains that Ciena will fail to meet revenue guidance for the January quarter and land below the Street consensus of $828 million at $810 million.

Ciena stock dropped 3.5% to $35.02 Friday, as the S&P 500 and Nasdaq Composite have gained about 1%.

Email: Alistair Bates at alistair.bates@barrons.com


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Author:

LongTerm CapGains

Subject:

News

Sentiment:

Neutral

Date:

12/10/19 at 4:56 AM CST

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