Street Calls of the Week
Investing.com - B.Riley initiated coverage on ADTRAN (NASDAQ:ADTN) with a Buy rating and a $16.00 price target on Thursday. The target represents significant upside from the current price of $8.77, with analyst targets ranging from $9 to $15. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.
The firm identifies ADTRAN as a leading provider of broadband network equipment serving service providers, utilities, and municipalities, with an expanded total addressable market of $14 billion following its July 2022 acquisition of optical networking equipment supplier ADVA. The company maintains a strong financial position with a current ratio of 1.96, indicating healthy liquidity.
After the communications equipment industry experienced an inventory correction cycle throughout 2023-2024, B.Riley notes that recent industry data indicates demand has recovered, positioning ADTRAN to capitalize on the current cycle with its access and optical businesses.
The research firm highlights particularly strong demand in Europe, a significant market for ADTRAN, and expects the company to gain market share through cross-selling initiatives as one of few companies offering both access and optical solutions.
B.Riley also points to ADTRAN’s plans to strengthen its balance sheet through real estate sales and divestiture of its Timing/Synchronization business, which combined with improving profitability, could provide flexibility to address its minority share liability.
In other recent news, ADTRAN Holdings announced the successful pricing of its $175 million convertible senior notes offering, an increase from the initially planned $150 million. The notes, which carry an interest rate of 3.75%, will mature on September 15, 2030, with interest payments starting in March 2026. The initial conversion rate is set at 86.8206 shares of common stock per $1,000 principal amount, translating to a conversion price of approximately $11.52 per share. This represents a 30% premium over the last reported sale price of $8.86. ADTRAN had initially planned to offer $150 million in notes, with an option for initial purchasers to buy an additional $22.5 million. The notes are senior, unsecured obligations intended for qualified institutional buyers. These recent developments reflect ADTRAN’s strategic financial maneuvers in the market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.