UBS raises Ciena's price target due to 5G demand growth, but concerns about margin pressures

From Yahoo Finance: 2025-06-24 12:56:00

Ciena Corporation (NYSE:CIEN) is among the top 10 best 5G stocks to invest in, according to analysts. UBS analysts raised their price target for CIEN from $73 to $78 on June 6, citing a 2.86% revenue growth over the previous 12 months, driven by an 85% increase in Direct Cloud-related revenue.

Despite strong revenue numbers, Ciena’s gross margin of 41% fell short of UBS’s forecast of 42.3%, due to a product mix shift towards pluggables and RLS products. The company’s projected gross margin of approximately 42% for FY25 is expected to impact its financials.

UBS analysts expressed concerns about Ciena’s ability to meet long-term gross margin and operating margin goals, despite raising FY25 revenue growth estimates to around 14%. The company offers network operators solutions in optical networking, network management, and automation, with a focus on 4G/5G convergent xHaul technology and services.

While CIEN shows investment potential, UBS suggests exploring undervalued AI stocks with greater upside potential and lower downside risk. The company is a key player in 5G technology, but other opportunities may offer more favorable returns. No specific recommendations were provided in the article.



Read more at Yahoo Finance: UBS Ups Ciena (CIEN) Price Target as 5G Demand Grows Despite Margin Pressures