Shares of Ciena Corp., a maker of equipment and software for telecommunications and cable providers, posted their biggest decline since October after an FBR Capital Markets analyst downgraded the stock, citing increased competition.
The shares fell 6.3 percent to $16.77 at 3:06 p.m. Tuesday in New York, after earlier slipping as much as 9.4 percent to $16.22. Through Monday, the stock had gained 48 percent this year.
Scott Thompson, an analyst at FBR Capital Markets, downgraded the Linthicum, Maryland-based company today to market perform, the equivalent of a hold rating, from outperform. In a research note, Thompson said Cisco Systems Inc.’s efforts to merge its optical and routing platforms are making the equipment market more competitive. He maintained a 12-month target price of $18 a share.
“While we expect Ciena to continue to respond well to several positive catalysts, we remain increasingly more concerned about the negative,” Thompson wrote. “Given the run the stock has had, move to the sidelines until we have more visibility into what appears to be a rapidly changing competitive environment.”
David Dixon, another analyst at FBR Capital Markets, said in a separate note today that telecommunications carriers Verizon Communications Inc. and AT&T Inc. are reassessing spending based on weaker domestic demand. Ciena will report fiscal third-quarter earnings later this month.
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