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    CIEN · NYQ · Technology

    Ciena Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 21.18

    Market price

    USD 348.80

    Implied upside

    -93.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Wrong toolThis model values the shares at 6.1% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.

    Current EV/EBITDA of 110.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 21.18-93.9%
    Exit multiple
    USD 67.93-80.5%
    Market price
    USD 348.80

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m131m261mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 5.2bnUSD 5.7bnUSD 6.3bnUSD 6.9bnUSD 7.5bn+9.5%
    EBITUSD 354.3mUSD 387.9mUSD 424.8mUSD 465.1mUSD 509.3m+9.5%
    NOPATUSD 279.9mUSD 306.5mUSD 335.6mUSD 367.5mUSD 402.4m+9.5%
    Add depreciation & amortisationUSD 174.5mUSD 191.1mUSD 209.3mUSD 229.2mUSD 250.9m+9.5%
    Less capital expenditureUSD -147.2mUSD -161.2mUSD -176.5mUSD -193.3mUSD -211.7m+9.5%
    Less increase in working capitalUSD -125.3mUSD -137.2mUSD -150.2mUSD -164.5mUSD -180.2m+9.5%
    Free cashflow to firmUSD 181.9mUSD 199.1mUSD 218.1mUSD 238.8mUSD 261.5m+9.5%
    Discount factor0.94740.85040.76330.68520.6150-
    Present valueUSD 172.3mUSD 169.4mUSD 166.5mUSD 163.6mUSD 160.8m-1.7%
    Present Value Of The ForecastUSD 832.5m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.207Reported 1.309, pulled toward 1.0 (Blume)
    Cost of equity11.64%Risk-free + beta x equity risk premium
    Cost of debt5.63%Interest expense / average total debt
    Market capitalisationUSD 49.5bn96.8% of capital
    Total debtUSD 1.6bn3.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC11.41%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 21.18

    75% of EV

    Forecast FCFF, final year
    USD 261.5m
    Capex at depreciation, working capital in reinvestment
    USD 463.5m
    Less reinvestment at g/ROIC (21.9% of NOPAT)
    USD -101.6m
    Capitalised
    USD 361.9m
    ROIC (WACC floor)
    11.4%
    Terminal value, undiscounted
    USD 4.2bn
    Terminal value, discounted
    USD 2.6bn
    Enterprise value
    USD 3.4bn
    Less net debt
    USD 317.5m
    Equity value
    USD 3.1bn

    Exit at 20.0x EBITDA

    Value per shareUSD 67.93

    92% of EV

    Terminal value, undiscounted
    USD 15.2bn
    Terminal value, discounted
    USD 9.4bn
    Enterprise value
    USD 10.2bn
    Less net debt
    USD 317.5m
    Equity value
    USD 9.9bn

    Spread between methods: 105%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.41%26.7826.8927.0127.1227.23
    10.41%23.6123.7023.8023.9024.00
    11.41%21.0121.0921.1821.2621.35
    12.41%18.8418.9218.9919.0719.15
    13.41%17.0117.0817.1517.2217.28

    Outlined: this model. Green text: above today's price of 348.80. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Discount rate11.4%3.0%-8.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.