QS Research · Michael Burry's Scion Capital analyst template · 2006
CIENA CORP (CIEN)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case -14% · downside -39% · upside +12%
Using the TTM to Aug 1, 2026 base from section 13 (EBITDA $868.8M, revenue $6.02B), a 35x EV/EBITDA base case gives $868.8M x 35 = $30.41B EV, less $3.23B debt plus $2.63B cash = $29.81B equity, or about $210/share (-13.6% vs $243.39); 25x gives about $149 (-38.8%) and 45x about $272 (+11.5%). The business is accelerating—Q3 FY2026 revenue +37.0%, FY2026 guidance $6.42B, $8.5B backlog and FY2027 at least 30% growth—but at 40.4x TTM EBITDA, 52.7x P/E and 2.4% FCF yield the market is not missing the AI/optical story; it is paying a premium for it. A deep-value buyer has no margin of safety at $243.39, and the rule does not support a short because the base case is not -30% or worse, so this is a watch, not a long. No cycle-average normalization is used: the call rests on TTM operating earnings, not an average of FY2022-FY2025.
Key numbers
- Share price: $243.39
- Market cap: $34.51B
- Latest financial period: TTM to Aug 1, 2026
- Revenue (TTM): $6.02B
- EV / EBITDA (TTM): 40.4x
- P/E (TTM): 52.7x
- Price / book: 11.29x
The 15 boxes
- ✓ 1. Long-form business notes
Ciena is an optical networking and network software/services vendor: FY2025 revenue was $4.77B, operating income $197.5M and operating cash flow $806.1M, with hardware, software and services sold direct and via partners to cloud and service providers. Between the FY2020 and FY2025 10-Ks the portfolio language moved from Converged Packet Optical/Packet Networking to Optical Networking/Routing and Switching, with FY2025 adding AI/DCI interconnect products and the Nubis acquisition. The sources do not break out segment revenue or margins.
- ✓ 2. Competitive advantage
The sources do not establish a durable competitive advantage for Ciena. It competes in an intense market dominated by larger multinationals (Nokia, Huawei, Cisco, HPE, ZTE), with price, incumbency and relationships among the key factors, while its top five customers were approximately 50% of FY2025 revenue and contracts generally lack minimum purchases. FY2025 revenue was $4.77B and gross profit $2.00B, but operating income was only $197.5M, down from $487.0M in FY2020, so the margin/return history points to thin, cyclical economics; $806.1M operating cash flow is the strongest financial counterpoint but not proof of pricing power.
- ✓ 3. 10-Q takeaways
Q3 FY2026 (quarter ended 2026-08-01) shows accelerating demand: revenue of $1.67 billion, up 37.0% year over year, with nine-month FY2026 revenue of $4.67 billion (+36.6%). Gross margin rose 410 bps to 45.4% on cost reductions, pricing, mix and tariff recoveries, while operating expense grew only 6.6%, so Networking Platforms segment profit more than doubled to $412.9 million. Orders exceeded revenue and management describes 'historically high backlog' amid constrained supply, funded by $683.6 million of nine-month operating cash flow and a $2.9 billion convertible refinancing that cut quarterly interest expense to $5.8 million; the weak spot is Blue Planet (revenue -16.5%, nine-month segment loss of $6.2 million) and rising cloud-customer concentration.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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