On Aug 8, 2014, we issued an updated research report on
ADTRAN has delivered positive earnings surprises in all four
quarters last year, with an average beat of 28.58%. In
second-quarter 2014, the company's bottom line beat the Zacks
Consensus Estimate while the top line was on par with the
The broadband access and IP networking equipment market is
highly competitive. The company competes with large and
well-established networking OEMs, both in the enterprise and
carrier market segments. As a result, sales in both tier 2 and tier
3 markets in the U.S. have deteriorated in the reported quarter.
Competition would further increase if new companies enter the
market or the existing competitors expand their product lines.
Intensifying competition will compel ADTRAN to slash product prices
along with market share.
ADTRAN continues to perform creditably despite a challenging
business environment. The company is currently facing considerable
volatility in its business owing to irregular capital spending by
telecom carriers. Moreover, the company's international business is
largely exposed to currency fluctuations and exchange rate risks.
Ongoing mergers and acquisitions in the telecom and cable sector
may further result in customer churn for ADTRAN.
ADTRAN's dependency on a small group of suppliers may jeopardize
the company's inventory management as it may fail to deliver
equipment on a timely basis, thereby losing customer confidence.
Moreover, ADTRAN deals with a limited number of customers which
might impact top-line growth going forward.
ADTRAN currently carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
Other better-ranked stocks worth considering in this sector
include CommScope Holding Company, Inc. (
), Ericsson (
) and DragonWave Inc. (
). All three carry a Zacks Rank #2 (Buy).
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ADTRAN INC (ADTN): Free Stock Analysis Report
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