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Adtran Outlook Will Brighten in 2016 – Analyst

Broadband equipment maker Adtran is set to have a much better year than in 2015, when its revenues shrank, thanks to a pick-up in spending among service provider and enterprise customers, according to Michael Genovese, an analyst at MKM Partners.

Adtran Inc. (Nasdaq: ADTN) is expected to report a year-on-year revenue decline of about 5% for 2015 due partly to a lack of new service provider contracts and the weak Euro, but the situation will improve markedly this year, predicts Genovese.

New opportunities include projects with ten US service providers set to receive nearly $9 billion in support over the next six years from the federal government's Connect America Fund, according to MKM Partners.

There could also be more fiber-to-the-curb work with AT&T Inc. (NYSE: T) and a vectoring rollout at CenturyLink Inc. (NYSE: CTL), reckons Genovese.

"We believe deploying vectored xDSL is a top strategic priority for CenturyLink in 2016," says Genovese in a research note. "Further, we think Adtran is fairly far along in lab and field trials … We estimate vectoring at CenturyLink could be a $100 million plus opportunity for Adtran over two to three years."

MKM Partners has raised its forecasts for Adtran and now expects the company to make $138 million in revenues for the fourth quarter of 2015 -- up from a previous forecast of $136 million -- and $630 million in 2016, compared with an earlier forecast of $619 million.

Genovese thinks Adtran will report full-year revenues of $598.5 million for 2015.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

brooks7 1/7/2016 | 11:31:28 AM
Re: Rosier outlook
Just to put a damper on things....I think our experience with CAF funds and the like is that they end up substituting for CAPEX not increasing it.  Essentially, CAF funds and the ilk lower the cost of capital but companies use it to reduce costs not acclerate projects.  I think this has been born out over the long haul.

seven

 
iainmorris 1/7/2016 | 9:54:48 AM
Rosier outlook This would be something of a turnaround for Adtran in terms of sales performance and surely bodes well for other makers of broadband network equipment active in the US market
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