Ciena Corporation CIEN recently announced that its WaveLogic 6 Extreme (WL6e) coherent optics technology has been used by Southern Cross Cable Limited to achieve connectivity by transmitting the world’s first transpacific 1 Tb/s single-carrier wavelength across 13,500 km live production network. WL6e delivered an effortless 1 Tb/s performance over the “world’s longest single optical submarine cable segment.” The achievement underscores the advanced capabilities of WL6e and the adaptability of Southern Cross’ network.

Ciena’s advanced technology will aid Southern Cross in significantly boosting the reliability and resilience of connectivity across Oceania, meeting growing bandwidth demands for artificial intelligence (AI), video, content and cloud applications. With WL6e, Southern Cross is further advancing its network ecosystem to provide high-capacity digital pathways connecting Australia, New Zealand and the United States.

Southern Cross will start volume deployment of WL6e across its network in the first calendar quarter of 2025, including the Southern Cross NEXT cable, which offers the lowest latency between Sydney/Auckland and Los Angeles. Also, Southern Cross is using Ciena’s GeoMesh Extreme solution with the 6500 Packet-Optical Platform powered by WL6e to boost network capacity more than 100 times, using infrastructure originally designed for 2.5 Gb/s wavelengths.

Ciena Corporation Price and Consensus

Ciena Corporation price-consensus-chart | Ciena Corporation Quote

Ciena highlighted that as AI and cloud demands grow, providers use their WaveLogic 6 to enable 800G services, connecting data centers and creating AI-ready networks with enhanced scalability.

Ciena’s WaveLogic 6 Technology Bode Well

Ciena’s performance is driven by strengthening bandwidth demand owing to rapid cloud adoption and the proliferation of AI technology use cases. As the industry's first 1.6 Tb/s coherent optic solution, its WaveLogic 6 Extreme introduces cutting-edge capabilities for optical transport.

The company’s WaveLogic 6 Extreme is gaining steady traction. Revenues from WaveLogic 6E totaled in fourth-quarter fiscal 2024, with shipments made to multiple customers, including Verizon, euNetworks and One New Zealand, who have also publicly announced their trials and deployments. The increasing adoption of WaveLogic 6 technology will boost Ciena’s top-line growth, propelling the stock upward.

In November 2024, Ciena’s WaveLogic 6 Extreme was implemented by EuNetworks, a leading provider of critical bandwidth infrastructure, as Europe’s first 1.6 Tb/s coherent solution. In October 2024, Ciena’s WaveLogic 6 technology was adopted by Boldyn Networks to enhance its fiber network in New York and New Jersey through a scalable wavelength service that delivers up to 1.6Tb/s per channel. Boldyn Networks integrates advanced coherent technology with a simplified, server-like operational model using Ciena’s Waveserver platform, effectively reducing costs per bit and energy use

Robust Guidance

For the first quarter of fiscal 2025, management expects revenues in the range of $1.01-$1.09 billion. The adjusted gross margin is estimated in the low-40% range. Adjusted operating expenses are projected to be nearly $350 million.

Fueled by robust demand for its solutions in cloud and AI-driven markets, Ciena announced a revised set of long-term targets covering fiscal 2025 to fiscal 2027. It expects significant investments from cloud providers in capital expenditures to bolster AI networks as demand increases. Additionally, it expects service provider order patterns to strengthen, with inventory levels normalizing and aligning more closely with actual consumption. As a result, Ciena projects an average annual revenue growth of 8% to 11% over the next three years, up from the previous target range of 6% to 8%.

Ciena aims to enhance its operating efficiency by increasing profit margins and managing the rise in operating expenses more effectively. The company is targeting an adjusted operating margin of 15% to 16% by fiscal 2027. In addition, Ciena expects to generate an annual free cash flow equivalent to 55% to 60% of its adjusted operating income over the next three years.

Ciena’s Zacks Rank & Stock Price Performance

CIEN currently carries a Zacks Rank #3 (Hold). Shares of the company have soared 70% in the past six months compared with the industry's growth of 69.6%.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Ubiquiti Inc. UI, InterDigital, Inc. IDCC and Intrusion Inc. INTZ. UI and IDCC presently sport a Zacks Rank #1 (Strong Buy), whereas INTZ carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The Zacks Consensus Estimate for Ubiquiti’s fiscal 2025 earnings per share (EPS) is pegged at $7.30. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its shares have surged 126.8% in the past six months.

The Zacks Consensus Estimate for InterDigital’s 2024 EPS is pegged at $15.19, unchanged in the past 30 days. IDCC earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 163.7%. The company’s long-term earnings growth rate is 15%. Its shares have jumped 42.4% in the past six months.

INTZ’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 43.06%. In the last reported quarter, Intrusion delivered an earnings surprise of 16.67%. Its shares have surged 105.4% in the past six months.

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