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ADTRAN Holdings (ADTN) Surges 12.5%: Is This an Indication of Further Gains?

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ADTRAN Holdings (ADTN - Free Report) shares ended the last trading session 12.5% higher at $21.74. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.7% gain over the past four weeks.

The healthy share price performance was driven by solid preliminary third-quarter 2022 results, whereby preliminary revenues of $340.7 million exceeded the consensus estimate of $330 million. ADTRAN reported preliminary gross margin of 28.8% and preliminary non GAAP gross margin of 38.1%. Preliminary GAAP operating loss for the quarter is $61.1 million, while preliminary non-GAAP operating income is $20.9 million.

This networking equipment maker is expected to post quarterly earnings of $0.18 per share in its upcoming report, which represents a year-over-year change of +1000%. Revenues are expected to be $330 million, up 139% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For ADTRAN Holdings, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ADTN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

ADTRAN Holdings is a member of the Zacks Technology Services industry. One other stock in the same industry, Thoughtworks Holding, Inc. (TWKS - Free Report) , finished the last trading session 1.7% higher at $9.64. TWKS has returned -12.8% over the past month.

For Thoughtworks Holding, Inc., the consensus EPS estimate for the upcoming report has changed -4.4% over the past month to $0.11. This represents a change of -21.4% from what the company reported a year ago. Thoughtworks Holding, Inc. currently has a Zacks Rank of #3 (Hold).

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