Cowen Upgrades ADTRAN, Sees Revenue Boost In Future From AT&T Deal

Cowen and Company on Thursday issued a note on ADTRAN, Inc. ADTN after the company won a major deal for the G Fast project with AT&T Inc. T. Cowen upgraded ADTRAN from Under-Perform to Market Perform and raised their price target from $14 to $16.

Analysts at Cowen and Company gave their investment thesis: "Our Market Perform rating is driven by ADTN's market position which we believe is turning a corner, driven by an increasing product mix of next generation DSL solutions; an improving gross margin outlook driven by U.S. CAF_II funded rollouts; In addition to CAF-II funded projects, we view AT&T's G.Fast project as driving incremental revenue growth opportunity."

Analysts noted that ADTRAN has a significant revenue opportunity due to its partnership with AT&T and multiple projects in the near term. Furthermore, because ADTRAN's G fast technology enables service providers to offer significantly higher broadband speeds, there's the possibility that AT&T sees increased demand for its service network and continues to partner with ADTRAN when continuing to build out its network infrastructure.

Based on news of the deal with AT&T, Cowen and Company increased ADTRAN's revenue forecasts from $630 million to $671 million for CY17. Analysts modeled this forecast raising EPS from $0.91 to $0.95 for CY17.