Zacks Investment Research downgraded shares of Tellabs Inc. (TLAB) from NEUTRAL to UNDERPERFORM on July 12, 2013, with a target price of $2.00.
We are downgrading our recommendation on Tellabs to Underperform ahead of its second quarter-2013 financial results. Tellabs' woes persist as the company continues to perform disappointingly. The company's worldwide reputed high-margin digital cross-connect products are gradually showing a downtrend. Management provided a weak financial guidance for second-quarter 2013. The board of directors decided to stop dividend payment in the last reported quarter. Management is aggressively targeting the mobile Internet market since the company's legacy switching products are quickly losing relevance. Tellabs is emphasizing on mobile backhaul solution, IP-packet optical solution and Insight Analytics Services. Unfortunately, the global macroeconomic fluctuations may hinder its speed of recovery. We do not find any immediate growth catalyst and consequently do not expect Tellabs to achieve profitability anytime soon.
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