Story updated at 9:55 a.m. to reflect market activity.
ADTRAN fell 1.9% to $22.03 in morning trading.
The firm reiterated its "neutral" rating for the company. UBS analysts Amitabh Passi and Tejas Venkatesh also cut EPS estimates for ADTRAN, citing an increase in operating expenses.
"On the earnings call, Adtran provided more clarity on its impressive 52.9% GM in 1Q14, attributing it to a) positive mix shift and product cost reductions across the entire business and b) skew towards higher-margin line cards vs. chassis," the analysts wrote. "In 2Q14, the company expects higher revenues from the international broadband access business, but also a mitigation of the favorable mix-impact resulting in GM in the range of 49- 50%. We believe the increasing international sales as a % of overall revenue as well as some uncertainty in the timing/scope of the upcoming AT&T ramp could cap GM improvements. Additionally, we're now seeing evidence of increased OpEx spending to sustain tier 1 ramps, and these factors contribute to our continued Neutral rating."
Must read: Warren Buffett's 10 Favorite Growth Stocks
Separately, TheStreet Ratings team rates ADTRAN INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ADTRAN INC (ADTN) a HOLD. The primary factors that have impacted our 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."