Why Adtran Stock Plummeted Today

0
22
This post was originally published on this site

What happened

Shares of Adtran (NASDAQ: ADTN) plunged today, and are down by 22% as of 11:35 a.m. EDT, after the networking equipment company announced preliminary fiscal third-quarter earnings estimates that were well below the market’s expectations.

So what

Revenue in the fiscal third quarter should be approximately $114 million, compared to the consensus estimate of $140.2 million in sales. That should translate into an adjusted loss per share of $0.06, while analysts were modeling for $0.03 per share in adjusted profit. In a statement, CEO Tom Stanton explained the shortfall:

Our revenue this quarter has been significantly impacted by a pause in shipments to a Tier 1 customer in Latin America and the continued slowdown in the spending at an international Tier 1 customer. With the exception of these two large customers, revenues generated from the rest of our business grew 20% over the previous quarter. Although we expect our Latin American customer sales to rebound, our current visibility regarding timing is limited. For the international Tier 1 customer, we expect that sales should resume with the new capital cycle in 2020.

Red stock chart  with a red down arrow in the middle.

Image source: Getty Images.

Now what

MKM Partners analyst Michael Genovese downgraded Adtran shares from buy to neutral following the news, clarifying that the top-line miss was attributable to reduced orders at Deutsche Telekom and the pause in shipments relates to Telmex. MKM reduced its price target from $17 to $11.

Adtran also provided an outlook for the fiscal fourth quarter, with revenue expected to be flat to slightly down on a sequential basis. Adjusted operating expenses should be roughly 10% lower than adjusted expenses in the second quarter.

10 stocks we like better than ADTRAN
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and ADTRAN wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of June 1, 2019

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

LEAVE A REPLY

Please enter your comment!
Please enter your name here