UPDATE: Bank of America Merrill Lynch Reiterates Underperform Rating, Raises PT on Adtran
In a report published Monday, Bank of America Merrill Lynch reiterated its Underperform rating on Adtran (NASDAQ: ADTN), and raised its price target from $14.00 to $16.00.
BofA Merrill Lynch noted, “Heading into FY13, we believe Adtran's prospects will remain challenged through 1H. That said, we see glimmers of hope emerging for 2H. While we tweak our FY13 estimates higher from $0.80 to $0.83, we maintain the Underperform rating pending greater clarity on the upside potential from some of these opportunities...We forecast North America wireline capex to decline just 2% in 2013; however, this bakes-in a 20% decline in capex at customers Frontier and Windstream. While we forecast stable capex at CenturyLink, a 20%+ customer, we expect some share loss at CenturyLink and Frontier to competitor Calix. We believe a best case op margin assumption is the low to mid teens, down from mid 20s historical level, given the high opex structure and our expectation for gross margin to remain several pts below the historical level of high 50s due to competition and unfavorable product mix.”
Adtran closed on Friday at $20.80.
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