Morgan Keegan Analyst Positive on Nortel-Boosted Ciena

A Reuters report cites a Barron’s article in which Morgan Keegan analyst Simon Leopold suggests that Ciena shares could nearly double in the next year. (Yes, that was convoluted, but I wanted to provide proper attribution for all the sources.)

Leopold believes improved conditions in the telecommunications sector and greater scale as a result of Ciena’s pending acquisition of Nortel’s Metropolitan Ethernet Networks (MEN) business will boost the company’s fortunes.

Ciena doesn’t have Nortel’s assets yet, though. Ciena’s $521 million stock-and-cash offer is a staking-horse bid in an auction process that allows competing bidders to stake their claims. So far, no other company has leapt into the auction ring, and there’s good reason to believe Ciena’s bid will prevail.

Nonetheless, the slight chance of a competing bid remains. Many analysts believe Ciena can financially support the Nortel acquisition at the current price, but they would be less likely to advocate the purchase if that price were to increase appreciably.

At one time, Nortel’s MEN assets were considered its “crown jewels,” and some observers estimated they might fetch as much as $1 billion at auction.

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