Shares of ADTRAN, Inc. (NASDAQ:ADTN), a small-cap provider of networking and communications equipment, have lost more than 15 percent over the past three months. While the stock has a "heightened degree of uncertainty" and more near-term downside, according to Goldman Sachs, the firm dropped its bearish stance on the stock Tuesday.
The Analyst
Goldman Sachs' Doug Clark upgraded Adtran's stock rating from Sell to Neutral with an unchanged $17 price target.
The Thesis
CenturyLink accounts for around 25 to 30 percent of Adtran's total sales, and it is possible that CenturyLink will resume its multiyear vectoring upgrades, which represent around $35 million in quarterly revenue for Adtran, Clark said.
Despite the uncertainty with a key customer, a combination of potential new customer gains from AT&T, Verizon and others creates a "more balanced risk-reward" profile for Adtran, Clark said.
Price Action
Shares of Adtran were trading down slightly at $19.68 late in Tuesday's trading session.
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