Barclays Maintains an 'Overweight' on ADTRAN (ADTN); NSN: Healthy Accretion, with Healthy Risk

Barclays maintains an 'Overweight' on ADTRAN (NASDAQ: ADTN) price target of $35.00.

Barclays analyst, Jeff Kvaal, said, "Yesterday ADTRAN announced its plans to acquire Nokia Siemens Networks' (NYSE: NOK)(NYSE: SI) fixed line Broadband Access business. While the deal offers immediate international expansion and significant accretion, we consider it likely to require significant integration effort and thus hold a modestly cautious initial view"

"An attractively priced deal as NSN refocuses on wireless: ADTN indicated the transaction cost is significantly less than Blue Socket (~$23M) which implies only ~0.1x EV/Sales. NSN wants to ensure a viable supply to customers post divestiture; hence, ADTRAN was able to expand its international footprint at low cost. NSN's biggest customer is Deutsche Telekom (NYSE: DT). Its largest product is IP DSLAM."

Kvaal Call: We consider a ~25% boost to NSN's gross margins (there are few opex synergies) a difficult task even for ADTN's talented management team.

For an analyst ratings summary and ratings history on ADTRAN click here. For more ratings news on ADTRAN click here.

Shares of ADTRAN closed at $30.46 yesterday.

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