UPDATE: Citigroup Downgrades ADTRAN to Sell on Wireline Demand Weakness

Citigroup reduced its rating on ADTRAN

from Neutral to Sell and lowered its price target from $17 to $12.50. Citigroup said, "Although, in our view, ADTN has been among best managed franchises in telecom equipment, we believe it faces challenges in its mainstay wireline access franchise and downgrade shares to Sell with a $12.50 target price based on our below-consensus EPS and a 14x target P/E. Tepid demand in wireline access drives a more conservative outlook and our expectation of P/E compression from current 25.4x P/E, which we see as an unsustainable 100% premium vs. S&P 500." ADTRAN closed at $19.68 on Tuesday.