UPDATE: Citigroup Cuts PT to $2.50 on Tellabs on Fundamental Headwinds

Citigroup reiterated its Neutral rating on Tellabs TLAB but reduced its price target from $3.50 to $2.50. Citigroup noted, "In our view, Tellabs faces structural headwinds across its served markets related to either scale, margin profile or both factors. While we believe packet optical and metro transport will be areas of focused investment for carriers, particularly in North America, we believe the decisions around vendor selection by Tier-1 carriers have largely been made at this time, and we do not believe Tellabs is a major participant. We see Data as a crowded market where TLAB lacks scale; Access is similarly crowded market with unattractive margin profile." Tellabs closed at $3.37 on Tuesday.