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Let's talk about the popular Ciena Corporation (NYSE:CIEN). The company's shares saw a significant share price rise of 49% in the past couple of months on the NYSE. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Ciena’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
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What Is Ciena Worth?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 7.0% below our intrinsic value, which means if you buy Ciena today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $85.56, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Ciena’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
View our latest analysis for Ciena
Can we expect growth from Ciena?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Ciena. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? CIEN’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on CIEN, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.