One thing investors need to continue to scour the market for is stocks that are still relatively cheap in a very expensive market. One good place to look in technology is the communications equipment stocks. A new report from UBS notes that the top stocks in the firm’s universe have pulled back over the past two weeks over various macro concerns and may be offering investors a very solid entry point.
With capital expenditures at the service providers and cable companies hopefully bottoming out in the first quarter, the UBS team is very positive on the set-up for the top companies through the rest of this year. While some may benefit more than others, all the companies rated Buy at UBS currently make good sense for aggressive growth accounts.
This company is a leading maker of fiber optic networking equipment sold to telecom carriers. Ciena Corp. (NYSE: CIEN) is expected to get a large chunk of the Verizon 100G network build-out, with some analysts thinking the company could see as much as 30% of the total. Some firms think that Verizon could end up being as much as a 10% customer next year.
Ciena leverages its deep expertise in packet and optical networking and distributed software automation to deliver solutions in alignment with its OPn architecture for next-generation networks. The company enables a high-scale, programmable infrastructure that can be controlled and adapted by network-level applications and provide open interfaces to coordinate computing, storage and network resources in a unified, virtualized environment.
In addition to the Verizon deal, a majority of Enterprise and Web/cloud data centers are in the process of running high-speed 40/100G optical interconnects between their data centers. This could also mean added business for Ciena.
The UBS price target for the stock is $30. The Thomson/First Call consensus price target is $28.09. Shares closed on Thursday at $25.27.