Technology

Deutsche Bank Has 5 Data Networking Tech Stocks With Big Upside Potential

Ciena

This company has had a very up-and-down 52 weeks, and it has frequently been the subject of takeover rumors. Ciena Corp. (NYSE: CIEN) is a vendor for high-capacity optical transport and Ethernet switching equipment to carriers, enterprises, cable operators and governments. It specializes in transitioning legacy communications networks to converged, next-generation architectures, capable of efficiently delivering a broader mix of high bandwidth services.

The company’s Converged Packet Optical segment offers networking solutions optimized for the convergence of coherent optical transport, Optical Transport Network (OTN) switching and packet switching. Its products comprise the 6500 Packet-Optical Platform, 5430 Reconfigurable Switching System, CoreDirector Multiservice Optical Switches and OTN configuration for the 5410 Reconfigurable Switching System.

The Deutsche Bank price target is $30. The consensus price target for the stock is $28.64. The shares closed most recently at $25.80.

Corning

This was a huge player in the fiber build-outs in the 1990s and may be ready to ramp back up for new deployments. Corning Inc. (NYSE: GLW) is one of the world’s leading innovators in materials science. For more than 160 years, Corning has applied its unparalleled expertise in specialty glass, ceramics and optical physics.

Its products enable diverse industries such as consumer electronics, telecommunications, transportation and life sciences. They include damage-resistant cover glass for smartphones and tablets; precision glass for advanced displays; optical fiber, wireless technologies and connectivity solutions for high-speed communications networks; trusted products that accelerate drug discovery and manufacturing; and emissions-control products for cars, trucks and off-road vehicles.

The analysts see the company as a winner in not only the new 5G wireless, but also strong Internet of Things applications. They feel both areas are infrastructure opportunities for the company given what they say is the robust demand for IoT connectivity and 5G infrastructure builds. The analysts also note cloud demand as a new growth driver for optical connectivity.

Corning investors are paid a 2.25% dividend. The $30 Deutsche Bank price target compares with the consensus target of $26.80. Shares closed Monday at $27.72.

Commscope

This company rounds out the five top ideas at Deutsche Bank. Commscope Holding Co. Inc. (NASDAQ: COMM) is a leading provider of antennas, cabling connectors and other connectivity equipment for enterprise and service provider customers. The company is a market leader in its three segments: Wireless, Enterprise and Broadband.

The company reported strong fourth-quarter results but guidance for the first quarter missed consensus estimates. 2017 guidance as a whole was soft but mostly in line. North American fiber and wireless demand drove the outperformance, and network densification continues to be a positive trend. International markets were weak but fiber, deleveraging, cost synergies and potential regulatory upside stories are intact.

The Deutsche Bank price target is $42, and the consensus target is $43.07. The stock closed Monday at $39.06.

The revolution in data networking will only continue to grow as consumer and business demand for all Internet of Things and beyond continues to manifest. While attractive now, these stocks are only suitable for accounts with a high risk tolerance, as earnings or guidance misses can cause big volatility.