Stifel analysts initiated coverage of Ciena (NYSE:CIEN) with a Buy rating and $62 per share price target in a note to clients Thursday.
The firm believes strong bandwidth growth should support longer-term demand for the telecommunications company.
Furthermore, they believe CIEN has established itself as a "leading provider of optical networking systems and associated services and software" to a wide range of global network operators, including telecom service providers, cable and multi-service operators, cloud service providers, submarine network operators, governments and enterprises.
"An underlying tenet behind the company’s philosophy has been bandwidth growth, which management expects to continue to increase in line with a historical growth rate of approximately 30% regardless of cyclical impacts," wrote the analysts. "We believe that this underlying data growth will maintain longer-term tailwind drivers for the optical networking component and equipment markets."
The Stifel analysts expect the increasing complexity of network architecture to benefit CIEN, compared to competitors, due to the company's leadership position in the 800Gbps market and "with line of sight to its next-generation 1.6Tbps product launches next year."