Back to top

Analyst Blog

We are upgrading our recommendation on ADTRAN Inc. (ADTN - Analyst Report) to Outperform ahead of its second quarter of 2013 financial results, which will be released tomorrow before the opening bell.

Why the Upgrade?

ADTRAN continues to perform creditably despite a challenging business environment. The company is facing double-edged problems: (1) the communications equipment industry is currently going through a volatile phase due to uneven capital spending of telecom carriers and (2) increasing competitive pressure within the industry.

In the last reported quarter, ADTRAN stabilized its businesses with the U.S. Tier 1 carriers, while generating contracts from several Tier 2 carriers. The Enterprise division also complemented the effort with strong sales of IP gateway and switch products.

Looking ahead, we expect the company to benefit from market share gain, new product offerings, solid international sales and growing service revenues. We believe that free cash flow will also remain steady in the near future.   

Apart from these, the company has also registered significant growth in its professional service activities that deploy the Total Access System components in telecommunication companies. The company has projected that professional services capabilities will remain accretive as both domestic and international carriers seek cost-effective methods to accelerate network deployments.

ADTRAN is also moving into virtual wireless LAN solutions with the buyout of Bluesocket, a privately held U.S. company that specializes in wireless network solutions with virtual control system.

Other Stocks to Consider

ADTRAN currently has a Zacks Rank #2 (Buy). Apart from ADTRAN, other stocks in the industry which are also performing well include Calix Inc. (CALX - Snapshot Report), Crown Castle International Corp. (CCI - Analyst Report) and Equinix Inc. (EQIX - Analyst Report). All these stocks currently carry a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.80 +7.04%
BANCO DO BR… BDORY 14.74 +5.66%
AIR INDUSTR… AIRI 9.99 +4.15%
EQT MIDSTRE… EQM 98.14 +3.38%
WEATHERFORD… WFT 23.64 +3.10%