As of Oct 25, we maintain our Neutral recommendation on
) based on the company's strong third-quarter 2013 financial
results. Both the top and the bottom line outpaced the Zacks
Consensus Estimate in the recently concluded third quarter of
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Why the Reiteration?
ADTRAN continues to perform creditably despite a challenging
business environment. Increased penetration of TA 5000 platform,
professional services at domestic and international levels,
mobile broadband infrastructure upgrades and funds generated
through Broadband Stimulus projects will continue to drive its
future growth prospect.
ADTRAN continues to perform well owing to solid contributions
from its Internetworking and Broadband Access product divisions.
The company has stabilized its businesses with Tier 1 carriers
and has also won contracts from Tier 2 carriers.
Recently, ADTRAN enhanced its technical services and support
program division. The new ProServices platform offers an
innovative ProStart installation program, ProCare maintenance
program and ProCloud managed networking services. The company
also started offering ProCloud Wi-Fi Private Label services in
Europe which we believe will not only bolster its new revenue
stream but will also lure new customers.
However, a weak macroeconomic spending environment, foreign
currency risk and stiff competition from other OEM manufacturers
may act as headwinds for the company while moving ahead.
Moreover, the company's stock has soared 43% over the last one
year and is currently trading close to the 52-week high range.
Currently, ADTRAN has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other stocks in this industry that warrants a look include
). All three stocks currently carry a Zacks Rank #2 (Buy).