Ciena Corporation (CIEN): Is This Insider Trading a Scary Sign?

After opening Thursday at around $39.35, Ciena Corporation (NYSE:CIEN) stock surged to as high as $39.68. It then made a downturn, dipping as low as $39.17. Although the stock bounced a bit into the close, it finished the day at $39.27, down -0.16 points or -0.41 percent on the day. The final volume for the day was 2.122 million, which was less than its average volume. The firm is left with a market cap of $6.09 billion and now has 155.05 million shares outstanding. Ciena Corporation (CIEN) stock has gained 1.11 percent of market value in 21 trading days.

CIEN stock has a trailing 3-year beta of 1.08, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $1.35 a share in the trailing twelve months. The stock’s value has surged 15.81 percent year to date (YTD) against a rise of 42.85 percent in 12 month’s time. The company’s shares still trade -14.07 percent away from its 1-year high of $45.70 and 70.81 percent up from 52-week low of $22.99. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Ciena Corporation (CIEN) will probably climb 11.76 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $51-month high price target. This represents a whopping 29.87 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $46, which represents a return potential of 17.14 percent when compared to the closing price of the stock of $39.27 on Thursday, March 14. The lowest price target for the stock is $32 — slightly more than -18.51 percent from CIEN’s current share price.

History has shown that shares in Ciena Corporation have gone up on 23 different earnings reaction days and are predicted to add 0.09 percent when the company reports upcoming earnings. Investors will get their next glimpse of CIEN’s Q2 earnings on June 06. Analysts are forecasting revenue to climb 12.3 percent to $820M in the fiscal second quarter, while earnings are seen soaring by nearly 78.26 percent to $0.41 per share. It earned $0.33 per share, better than the $0.3, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $779M, better than the $761M analysts expected. Earnings are estimated to increase by -88 percent this year, 25.77 percent next year and continue to increase by 13.2 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $39.07. Below this, the next support is placed in the zone of $38.86. Till the time, the CIEN stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 44.88 on daily chart, which may remain a cause for concern. If the price breaks below $38.86 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $39.58 mark may result into a pull-back move towards $39.88 level.

Shares of Ciena Corporation (CIEN) are trading at a P/E ratio of 24.08 times earnings reported for the past 12 months. The industry CIEN operates in has an average P/E of 17.47. Its P/E ratio went as low as 37.74X and as high as 248.51 over the 5-year span.Further, it is sporting a 1.89 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.6. 42.3 percent is the gross profit margin for Ciena Corporation and operating margin sits at 5.9 percent. Along with this, the net profit margin is 23.3 percent.