Shares of networking systems, services, and software solutions provider Ciena Corp. (CIEN) have climbed 44.2% over the past 12 months. Ciena recently delivered a better-than-expected performance for the fourth quarter on its revenue front, registering 25.7% year-over-year growth in revenue.
Additionally, CIEN has entered into a $250 million accelerated share repurchase agreement with Goldman Sachs, as part of its $1 billion share buyback program.
With these developments in mind, let us take a look at the changes in Ciena’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Ciena’s top two risk categories are Ability to Sell and Macro & Political, contributing 24% and 19% to the total 42 risks identified, respectively.
In its recent annual report, the company has added one key risk factor under the Production risk category. Compared to a sector average of 12%, Ciena’s Production risk factor is at 17%.
Ciena noted that due to higher demand across a number of industries, the global supply chain for some raw materials and components used in the company’s products has witnessed substantial strain recently. Additionally, the COVID-19 pandemic has only amplified this problem.
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This situation has impacted the lead times for Ciena’s products and could affect its ability to meet demand in a timely manner. While Ciena has taken steps to mitigate these challenges, its cost of goods sold could be negatively affected by these factors. The bottlenecks could also impact Ciena’s growth, gross margins, and financial performance.
Wall Street’s Take
On December 13, Citigroup analyst Jim Suva reiterated a Buy rating on the stock and increased the price target to $85 from $70 (14.7% upside potential).
Consensus on the Street is a Strong Buy based on 11 Buys and 2 Holds for the stock. The average Ciena price target of $80.38 implies a potential upside of 8.45%.
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