Cautious Outlook on Ciena: High Valuation and Uncertain Growth Prospects Lead to Sell Rating

In a report released today, Meta Marshall from Morgan Stanley maintained a Sell rating on Ciena, with a price target of $100.00.

Meta Marshall’s rating is based on a combination of factors that suggest caution regarding Ciena’s stock performance. Despite Ciena’s confidence in the durability of demand due to increasing data center connectivity needs, the stock is currently trading at a high valuation, over 30 times the projected earnings for fiscal year 2026. This high valuation may already reflect much of the anticipated growth, limiting further upside potential.
Additionally, while Ciena is optimistic about scaling its co-design DCOM deal with META and sees potential interest from other hyperscalers, the adoption of these technologies in existing data centers remains uncertain. The dependency on new builds for scaling and the time required for co-design adaptations with other cloud providers could pose risks to the expected growth trajectory. These factors contribute to a cautious outlook, leading to the Sell rating.