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Analyst Blog

On Feb 17, 2014, we issued an updated research report on ADTRAN Inc. (ADTN - Analyst Report). The company improved its year-over-year performance on strong contributions from its Internetworking and Broadband Access product divisions.

The results were supported by an improved spending atmosphere and increased strategic investment by its carrier and enterprise customers. Also, the company’s international business generated record high revenues.

ADTRAN has delivered positive earnings surprise in all four quarters last year, with an average beat of 44.21%. The company reported mixed financial results for the fourth quarter of fiscal 2013 with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.

Meanwhile, the company continues to perform well owing to strong contributions from the U.S., Europe, the Middle East and Africa and Latin America regions. ADTRAN has stabilized its businesses with the Tier 1 carriers and has also won contracts from Tier 2 and Tier 3 carriers. We expect the company to benefit from market share gain, strong growth of core products, solid international sales and growing service revenues.

However, global macroeconomic fluctuations, foreign currency risk and stiff competition may act as headwinds for ADTRAN moving ahead. Moreover, the stock price has soared more than 43.6% in the last one year and is currently trading at the high-end of its 52-week price range.

ADTRAN currently carries a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Other stocks worth considering in this sector include Telecity Group plc (TLEIY), Crown Castle International Corp. (CCI - Analyst Report) and CommScope Holding Company, Inc. (COMM - Snapshot Report). Crown Castle has a Zacks Rank #1 (Strong Buy), while CommScope and Telecity Group carry a Zacks Rank #2.

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