UBS Ups Ciena (CIEN) Price Target as 5G Demand Grows Despite Margin Pressures

Ciena Corporation (NYSE:CIEN) is on our list of the 10 best 5G stocks to invest in according to analysts. With a Neutral rating, UBS analysts raised their price target for Ciena Corporation (NYSE:CIEN) from $73 to $78 on June 6. As hyperscalers raise their infrastructure investments, the analysts reported that Direct Cloud-related revenue increased by 85% year-over-year, which enabled the company’s revenue grow by 2.86% over the previous 12 months.

UBS Ups Ciena (CIEN) Price Target as 5G Demand Grows Despite Margin Pressures

Despite encouraging revenue numbers, Ciena’s gross margin of 41% came in below UBS’s forecast of 42.3% and its target of the “low 40s,” owing to the company’s product mix shifting towards pluggables and RLS products. With a projected gross margin of roughly 42% for FY25, this change is expected to continue having an impact on the company’s financials.

Moreover, UBS analysts voiced concerns about the company’s ability to reach long-term goals for gross margin and operating margin, despite Ciena Corporation (NYSE:CIEN) raising its FY25 revenue growth estimates to roughly 14% from the prior 11%, indicating robust demand across its portfolio.

Ciena Corporation (NYSE:CIEN) offers network operators solutions to handle transport, routing, orchestration, and maintenance by delivering a wide range of products and services focused on optical networking, network management, and automation. With its 4G/5G convergent xHaul technology and services, the company is also a leading name in 5G.

While we acknowledge the potential of CIEN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

Read More: 10 Best Magic Formula Stocks for 2025 and 10 Best Retirement Stocks to Buy According to Hedge Funds

Disclosure: None.