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<Research> Citi Raises TP on Cisco Systems, Inc. (CSCO.US) to USD135 and Ciena Corporation (CIEN.US) to USD660; Optical Networking Growth Resilient
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Citi said in a report that following Cisco Systems, Inc. (CSCO.US)'s fiscal third-quarter results ended April 25 and its comments on sustained strong demand for Acacia, the broker remains positive on the underlying demand environment for optical networking. Cisco disclosed that Acacia orders in the fiscal third quarter exceeded USD1 billion, of which AI-related optical products surged nearly 4x to about USD950 million. In addition, there was demand growth for non-AI optical products from hyperscale customers. Looking ahead to the transition from 400G to 800G pluggable products, Citi believes both Cisco Systems, Inc. (CSCO.US) and Ciena Corporation (CIEN.US) are well positioned to maintain market leadership in this fast-growing optical cycle. The broker raised its forecasts for both companies to reflect their strong participation in AI-related infrastructure buildout through their optical businesses. Citi lifted its TP on Cisco Systems, Inc. (CSCO.US) from USD114 to USD135 (now based on 29x forecast FY2027 enterprise value to free cash flow, versus 25x previously), and raised its TP on Ciena Corporation (CIEN.US) from USD550 to USD660 (now based on 69x forecast 2027 PE, versus 62x previously). Citi reiterated its Buy ratings on both Cisco Systems, Inc. (CSCO.US) and Ciena Corporation (CIEN.US). Cisco Systems, Inc. (CSCO.US) and Ciena Corporation (CIEN.US) focus on high-end modulation technologies for optical systems, namely coherent optics. 400G ZR coherent pluggable products dominated hyperscale deployments in 2025. Citi expects customer preference to shift from 400G to 800G as use cases expand, potentially driving nearly 10x growth in 2026. Cisco Systems, Inc. (CSCO.US) held a 50% market share in the 800G segment in 2025, followed by Ciena Corporation (CIEN.US) with about 30%. Ciscos 800G ZR shipments exceeded those of any other vendor, and it disclosed that more than 40,000 units of 800G modules have been shipped year to date in 2026, implying port share above 50%. Management noted that, leveraging its prior mass-production experience with 400G products, Cisco can ramp up capacity faster than peers. However, Citi expects Ciena to gain further market share, supported by the power efficiency advantages of its 3-nanometer DSP geometry. (da/u) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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