Ciena's entry into the new edge router market will be a catalyst for shares, as the maker of optical communications gear will likely pick up Verizon Communications as an early customer, one Ciena stock analyst said Tuesday.
Ciena's upcoming edge router platform, called WaveRouter, will compete with products from Cisco Systems, China's Huawei and Nokia.
"Our checks reveal details on this new TAM (total addressable market) expanding upcoming platform," Raymond James analyst Simon Leopold said in a note to clients. Leopold upgraded Ciena shares to "strong buy" from outperform.
"Ciena has no share, so routing is all upside," Leopold added. "We expect Verizon will be among the early adopters."
Ciena stock jumped 4.7% to close at 50.87 on the stock market today.
Ciena Stock: Share Gains Coming From Huawei?
While Hanover, Md.-based Ciena could gain share, Leopold concedes it's not a fast-growing market.
"Dell'Oro forecasts the SP Edge Router market reaches $8 billion in 2023 and grows with a 2% CAGR (compound annual growth rate)," Leopold said.
Ciena's gear is built into telecom networks and internet data centers. Ciena stock gains could come at the expense of Huawei, Leopold said.
Meanwhile, Ciena stock may gain from U.S. government political pressure on China's Huawei, analysts say. Some countries have halted purchases of Huawei network gear on national security concerns.
Shares of Ciena have gained about 1% in 2023. Also, Ciena stock holds a Relative Strength Rating of 63, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
