By Senad Karaahmetovic
Morgan Stanley analysts downgraded Ciena Corp (NYSE:CIEN) to Equal Weight from Overweight with the price target of $57 per share (down from $59).
The analysts outlined several factors that prompted them to downgrade CIEN stock, namely: riskier outlook going forward, more reserved commentary on cloud, gross margin pressure, and a challenging near-term setup.
“We are downgrading CIEN to EW given our view for limited multiple expansion this year given risks around Cloud exposure and gross margin headwinds,” they wrote in a downgrade note.
Overall, the analysts see a more balanced risk-reward on CIEN stock amid Cloud exposure risk and gross margin headwinds.
The downgrade comes just a day after Raymond James analysts upgraded the CIEN stock to Strong Buy from Outperform. Analysts there wrote that the company’s rumored entry into the edge router market will be a catalyst for shares to re-rate higher.
Ciena shares are down 1.2% as Wednesday’s trading session opens for trading.