Is it too late to buy Ciena shares after a 16% post-earnings spike?

By:
on Dec 13, 2021
  • Ciena Corp shares edged slightly lower on Monday to trim its post-earnings gains.
  • The stock rocketed more than 16% after reporting its FQ4 results Thursday before markets opened.
  • The company issued a better than expected top-line outlook for FY2022 after beating analyst estimates.

On Monday, Ciena Corp (NYSE:CIEN) shares edged slightly lower, trimming last week’s massive post-earnings gains. Ciena announced its most recent quarterly results Thursday before markets opened, sparking a 16% post-earnings rally in the stock price. The stock traded relatively flat on Friday before edging lower on Monday. Ciena’s FQ4 revenue beat expectations while matching earnings estimates.

The company posted FQ4 non-GAAP earnings per share of $0.85, in line with Street expectations. On the other hand, its GAAP EPS of $0.66 was below the average analyst estimate of $0.73, while revenue for the quarter increased by 25.5% from the same quarter a year ago to $1.04, surpassing expectations by $20 million.

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Ciena also issued a sales growth guidance in the range of 11% to 13% compared to A Street average of 8%.

Is there time left to buy?

From an investment perspective, Cien shares trade at reasonable trailing 12-month and forward P/E ratios of 24.90 and 23.36, respectively.

Therefore, value investors could find it as an interesting option for their portfolios. On the other hand, analysts expect its bottom line to grow by 7.80% per year over the next five years, compared to the average annual growth of 88.60% in the previous five.

Therefore, it could be too late to buy the stock from a growth perspective.

Source – TradingView

Technically, Ciena shares seem to have recently spiked to complete an upward breakout from an ascending channel formation in the intraday chart. As a result, the stock has rallied deep into the overbought conditions of the 14-day RSI.

Therefore, investors could target potential technical pullback profits at about $70.04, or lower at $62.05. On the other hand, if the rally continues, Ciena could find resistance at about $76.12, or higher at $80.18.

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