The Huntsville, AL-based company is a global provider of networking and communications equipment. The company's solutions enable voice, data, video and Internet communications across a variety of network infrastructures.
"Our upgrade is based on what we believe is an increasingly robust outlook for 2016, driven by both incremental revenue opportunities from Connect America Fund Phase II (CAF-II) funding, as well as ongoing legacy local loop upgrades at Tier 1 and Tier 2 carriers," Drexel Hamilton said in an analyst note.
Additionally, the firm believes current Wall Street estimates for 2016 may be on the low side and have the potential for upward revisions. Drexel Hamilton is leaving its 2016 estimates unchanged, as they are on the upper range compared to the Street's.
Despite the rating boost, shares of Adtran closed down by 1.02% to $17.39 on heavy trading volume on Friday.
About 1.04 million of the company's shares were traded today, well above its average of 531,682 shares per day.
Separately, TheStreet Ratings Team has a "hold" rating on Adtran with a score of C. The primary factors that have impacted its rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and expanding profit margins.
However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity.
TheStreet Ratings objectively rated this stock recently according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: ADTN