Evercore ISI upgraded Ciena Corporation (NYSE:CIEN) from In Line to Outperform in late September. The firm described the stock as an “attractive way to gain exposure to the optical networking space.” It also raised its price target from $375 to $ 550. But how much upside remains when investors are already paying 56 times earnings? One could argue that there are better multiples for similar growth available, and that is indeed the case. Our Top 10 Co-Packaged Optics (CPO) Stocks to Buy in 2026 gives you 9 other stocks that benefit from the same niche but aren’t as expensive as Ciena.
The $25 EPS Case
According to analyst Amit Daryanani, Ciena could deliver sustained sales growth of more than 30% and EPS growth exceeding 35%, potentially reaching at least $25 in EPS by fiscal 2029. He forecasts the optical networking market will expand by 24% annually to $52 billion by then, as networking becomes a greater bottleneck in the AI buildout. Analyst Amit Daryanani stated:
Networking and optical interconnect are becoming larger bottlenecks for the AI buildout, and CIEN is positioned to benefit from this. We see CIEN on a path to $25+ EPS by FY29; on a low 20x P/E, the stock should work to $550+.
Ciena’s data center business adds another potential growth opportunity. The segment currently generates less than $500 million in revenue. The $25 figure isn’t an outlier: consensus EPS growth of about 48% in fiscal 2028 and 45% in fiscal 2029 puts fiscal 2029 EPS near $25.5. Still, it depends on several years of strong growth. Ciena’s path to $25 in EPS depends on sustaining rapid AI-driven growth, but which AI stocks are attracting billionaire Stanley Druckenmiller’s attention? Discover his 10 picks.
Cheaper One Year Out
Ciena’s forward P/E is 55.88x, roughly 68% above its most recent historical average of 33.21x. However, this figure is based on fiscal 2026 earnings, with the fiscal year ending in October. Using fiscal 2027 estimates, the P/E drops to 33.75x, bringing it almost back to its historical norm. That decline reflects expected EPS growth of 171.43% this fiscal year and another 65.55% next year. The premium is largely tied to expected earnings growth, not simply an inflated stock price.
Evercore’s valuation case depends on those earnings materializing. If the company reaches $25 in EPS and trades at a low-20s multiple, its shares could be worth $550 or more. Because consensus already models roughly that EPS, the upside requires estimates to be met, not beaten, and the stock to keep a low-20s forward multiple on them. The $550 is a fiscal 2029-based value, so it’s a multi-year target.
Ciena is not cheap compared with its historical valuation. But the valuation looks fair to attractive for a growth stock, provided the earnings outlook holds.
Ciena attracted more hedge funds, with the count climbing from 73 at the end of Q1 2026 to 81 at the end of Q2 2026. Meanwhile, short interest reached 4.29% of float as of September 30, 2026. Ciena’s valuation raises the question of where investors can still find AI-driven growth. Take a look at these 11 agentic AI stocks to buy right now.
Evercor’s upgrade depends on the company sustaining strong growth, which is also key to justifying its valuation. The increase in hedge fund ownership contrasts with continued bets against the shares.
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