We Expected More Backlog Growth = Buying Opportunity

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We Expected More Backlog Growth = Buying Opportunity

Telecom and Networking Equipment

Communications Technology - Market Overweight

CIENA CORPORATION (CIEN) June 5, 2026

We Expected More Backlog Growth = Buying Opportunity Rating:

Outperform

The Wolfe Byte Price: $535.63

The stock’s weakness is likely a by-product of elevated expectations, “sell-the- Price Target:

news” action, and slower-than-expected backlog growth. As a positive, margins $660

came in higher on mix, cost reductions, and pricing. Ciena remains our Wolfe Alpha % Upside:

23.2%List pick. Outperform.

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We Expected More Backlog Growth = Buying Opportunity... We were disappointed Company Information

by Ciena’s backlog growth. Frankly, we expected a significantly bigger Q/Q increase 52-Week Range $72 - $627

given all the bullish anecdotes from the Q1 EPS season as well as recent Market Cap. (MM) $75,737

conversations with industry contacts. It’s a good reminder that orders can be very Enterprise Value (MM) $78,383

Shares Out. (MM) 141.4

lumpy at Ciena (and elsewhere). To be clear, we don’t believe there’s any reduction Avg. Value Traded (MM) $1,657.71

in the bigger picture growth thesis we have for the business. We still believe the Adj. Debt to Cap 1.9%

company will ultimately be much larger than the Street expects over time (also see SI% of Float 3.2% FCF Yield 0.9%

our recent Ciena Bull/Bear debate (link) for more detail on the upside case). EV/ EBITDA 31.7x

Price to Earnings 75x

Margins – a Nice incremental Positive… Ciena reported 44.9% gross margins for

the quarter, above their 43.5-44.5% margin target. While a mix shift towards higher 700

margin products was the biggest upside driver, engineering cost reductions (2nd), and 600

pricing (3rd) also helped.