Ciena's earnings-fueled rally sends telecom sector ETFs higher
An earnings-related rally in Ciena (NYSE:CIEN) elevated exchange traded funds tied to the telecom sector during Thursday's intraday trading.
CIEN is owned by 123 different ETFs and forms a major part of iShares Trust - iShares North American Tech-Multimedia Networking ETF (NYSEARCA:IGN), with a portfolio exposure of 4.33% as per ETF.com. This represents the highest concentration of CIEN in any ETF in the market.
IGN rose 3.5% in Thursday's intraday action, driven higher by a 20% jump in CIEN.
The rally also included other ETFs with relatively high concentration of CIEN stock: SPDR S&P Telecom ETF (XTL) +2.7%, iShares U.S. Telecommunications ETF (IYZ) +1.3%, The Future Fund Active ETF (FFND) +1.3%, and iShares Cloud 5G and Tech ETF (IDAT) +0.3%.
CIEN shares surged after reporting better-than-expected results for Q4. The company benefited by favorable supply chain developments in the second half of the quarter. The company also predicted FY2023 revenue growth in the range of 16% to 18%, above the consensus growth of 15.9% due to significant backlog and continued signs of gradual supply improvement.
CIEN's strong earnings also positively influenced its peers during intraday trading: Extreme Networks (EXTR) +4.3%, Calix (CALX) +5.1%, F5, Inc. (FFIV) +2.6% and Lumentum Holdings (LITE) +8.9%.
Even with Thursday's advance, CIEN remains sharply lower for the year. The stock has lost around 33% of its value in 2022, as its business has been impacted by supply chain issues.
Looking at the year-to-date performance for ETFs in the space, IGN has lost around 14%, XTL down about 17%, IYZ plunged ~31%, IDAT has declined 26% and FFND slipped around 34%.
For more on CIEN, review a deep dive prepared by Seeking Alpha contributor Mark Van Mater, who says supply chain issues should continue to abate in 2023.