Zacks Investment Research downgraded shares of ADTRAN Inc. (ADTN) from OUTPERFORM to NEUTRAL on October 07, 2013, with a target price of $28.00.
We are downgrading our recommendation on ADTRAN to Neutral based on its high level of current valuation. The stock price has soared more than 74% in the last year and currently provides limited opportunity for above market gain. Meanwhile, ADTRAN continues to perform well owing to solid contributions from its Internetworking and Broadband Access product divisions. The company benefits from an improved spending atmosphere and increased strategic investments by ADTRAN's carrier customers. The company has stabilized its businesses with the Tier 1 carriers, while generating contracts from Tier 2 carriers. The Enterprise division complements with strong sales of IP gateway and switch products. We expect ADTRAN to benefit from market share gain, new product offerings, strong international sales and growing service revenues. We believe that free cash flow will also remain steady in the near future.
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