ADTN · ADTRAN Holdings
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $5.35
Note written ·
Price against the kill line
9.7% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $5.35, on record since 11 November 2026. The shares are down 44.2% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $5.35, which would show the shares recovering part of the post-report decline and leading the S&P 500. A fourth-quarter revenue result above the $292.0 million top of the guided range would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 281
- Revenue, change on a year (%)
- +0.6
- Gross margin (%)
- 38.5
- Operating margin (%)
- −0.3
- Free cash flow, four quarters ($M)
- 22.5
- Net cash, cash less debt ($M)
- −213
- Enterprise value to sales (×)
- 0.5
- Enterprise value to operating income (×)
- 21649.4
All filed numbers
What ADTRAN Holdings reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 281 | +0.6 | 38.5 | −0.3 |
| first filed | 281 | +6.1 | 37.0 | −3.6 |
| first filed | 286 | +15.5 | 39.5 | 2.2 |
| first filed | 292 | +20.1 | 39.0 | 1.5 |
| first filed | 279 | +22.7 | 38.3 | −1.0 |
| first filed | 265 | +17.3 | 37.3 | −5.0 |
| Pre-tax income ($M) | −4.6 |
| Net income ($M) four quarters: −25.1 | −9.2 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +1.8 |
| Operating cash flow ($M) | 56.4 |
| Capital spending ($M) | 33.9 |
| Free cash flow ($M) | 22.5 |
| Cash and short-term investments ($M) | 64.6 |
| Debt ($M) convertible debt plus credit line | 277 |
| Net cash, cash less debt ($M) | −213 |
| Deferred revenue ($M) +25.2% on a year | 101 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 235 |
| Inventory ($M) | 227 |
| Shareholders' equity ($M) including non-controlling interests | 120 |
| Market value ($M) | 394 |
| Enterprise value, market value plus net debt ($M) | 606 |
| Enterprise value to sales (×) | 0.5 |
| Enterprise value to operating income (×) | 21649.4 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 3.3 |
| Free-cash-flow yield (%) | 5.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 15.4% of shares outstanding sold short, 7.2 days of average trading to cover, +5.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $847K | $0 |
| 12 monthsfrom | $1.3M | $2.5M |
The thesis
ADTRAN Holdings' shares are more likely to lag the S&P 500 over the next three months. The company guided fourth-quarter revenue flat, third-quarter operating cash flow was negative, and a registration statement leaves room to issue stock. The fourth-quarter report, expected around February 2027, settles whether the optical-led margin recovery resumes.
The company guided fourth-quarter revenue to $272.0–292.0 million and non-GAAP (adjusted) operating margin to 1.0%–5.0% (third-quarter release, 2 November 2026). That range brackets the $281.2 million reported for the third quarter, which was up 0.6% from a year earlier. Net cash used in operating activities was $24.5 million, and cash plus restricted cash was $71.7 million at 30 September 2026 against an $83.0 million revolver and $194.2 million of convertible notes.
The shares closed at $4.86 on 12 November 2026, up from a closing low of $4.04 on 6 November 2026 and down 42.1% over three months. Chairman and CEO Thomas Stanton bought shares in the open market on 6 November 2026 and 9 November 2026, and CFO Timothy Santo bought on 6 November 2026 (SEC Form 4 filings). Rosenblatt downgraded the shares to Neutral on 4 November 2026.
Bullish and bearish views on ADTRAN Holdings, Inc.
The bull case on ADTRAN Holdings, Inc. (ADTN), in brief: executives bought at the lows. The bear case: revenue is flat and the guide is flat.
Bull case
- Executives bought at the lows. Stanton bought 150,000 shares at $4.01 on 6 November 2026 and 40,000 shares at $4.30 on 9 November 2026. Santo bought 17,820 shares at $4.16 on 6 November 2026 (SEC Form 4 filings dated 9 November 2026 and 12 November 2026). Two executives is too small a sample to carry a conclusion on its own.
- Margin held at the top of the range. Third-quarter non-GAAP operating margin was 5.0% and non-GAAP earnings per share were $0.09 (company release, 2 November 2026). The long-term 10% non-GAAP operating margin target was reiterated, per call coverage (MarketBeat, 3 November 2026).
- Optical and hyperscaler demand continues. CEO Tom Stanton cited continued growth in optical networking and increasing growth with hyperscale customers (release, 2 November 2026). Telia Estonia began trials of Adtran's 50G passive optical network technology (company news, 10 November 2026).
- Every published target sits above the close. Rosenblatt's target is $6.25, Evercore ISI's is $8, Needham's is $9 and B. Riley's is $14 (3 November to 5 November 2026). The $4.86 close of 12 November 2026 is below all four.
Bear case
- Revenue is flat and the guide is flat. Third-quarter revenue rose 0.6% from a year earlier, and the fourth-quarter range of $272.0–292.0 million brackets that level (release, 2 November 2026). Management cited seasonality, supply availability and timing of large customer projects.
- Margin was helped by a one-time item. Non-GAAP gross margin of 42.1% included about 200 basis points from refunds of tariffs under the International Emergency Economic Powers Act, which management flagged as largely nonrecurring (release, 2 November 2026; call coverage). GAAP operating margin was negative 0.3% and the GAAP diluted loss was $0.10 per share.
- Cash flow turned negative. Free cash flow was negative $39.4 million in the third quarter (call coverage, 3 November 2026). Against $71.7 million of cash and restricted cash, the company carried an $83.0 million revolver and $194.2 million of convertible notes at 30 September 2026.
- Analysts are cutting. Rosenblatt downgraded to Neutral with a $6.25 target, and B. Riley cut its target to $14 from $21 (4 November 2026). Evercore ISI and Needham kept Outperform and Buy ratings at $8 and $9.
- Issuance capacity is open. A universal registration statement filed 17 July 2026 covers common stock, preferred stock, debt and warrants, and a takedown can price on any trading day. No sale has been disclosed in company news.
Price setup
The shares closed at $4.86 on 12 November 2026. The closes that week were $4.13 on 5 November 2026, $4.04 on 6 November 2026 (the 52-week closing low), $4.29 on 9 November 2026, $4.41 on 10 November 2026 and $4.69 on 11 November 2026. The three-month reference close was $8.40 on 14 August 2026.
The 52-week high is $19.98, set intraday on 27 May 2026. The last close is 75.7% below it. The 50-day average of the adjusted closes is $6.59 and the 200-day average is $10.91, both as of 12 November 2026, so the shares sit well below each.
Other filings show the same recent activity. Stanton's Form 4 of 9 November 2026 also reports 91,439 shares withheld for tax at $5.43 and an option exercise of 225,775 shares on 3 November 2026. The company announced major-holdings notifications from Goldman Sachs Group on 10 November 2026 and 12 November 2026, and from BlackRock on 12 November 2026.
Catalysts ahead
- ~February 2027 (est.): Fourth-quarter and full-year 2026 results. Tests revenue against the $272.0–292.0 million guided range, non-GAAP operating margin against 1.0%–5.0%, and whether operating cash flow turns positive again.
What would change the view
A daily close above $5.35, which would show the shares recovering part of the post-report decline and leading the S&P 500. A fourth-quarter revenue result above the $292.0 million top of the guided range would also show the shares leading.
What it trades with
ADTRAN trades with small-cap telecom and optical equipment names, and its optical business depends on hyperscaler network spending. Management attributed part of the third-quarter shortfall to a tight supply environment, so component availability matters as much as demand. Results consolidate majority-owned Adtran Networks SE in Germany, which adds euro exposure. The shares fell sharply on company-specific news in July and again in November, so company results have driven the price more than any group move.
The evidence, claim by claim (7)
- Third-quarter 2026 revenue was $281.2 million, up 0.6% from a year earlier; non-GAAP operating margin was 5.0%, GAAP operating margin negative 0.3%; non-GAAP diluted earnings per share were $0.09 and the GAAP diluted loss was $0.10. ADTRAN Holdings third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- Fourth-quarter 2026 guidance: revenue of $272.0–292.0 million and non-GAAP operating margin of 1.0%–5.0%, citing seasonality, supply availability and timing of large customer projects. ADTRAN Holdings third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- Non-GAAP gross margin was 42.1%, including a benefit of about 200 basis points from refunds of tariffs under the International Emergency Economic Powers Act. ADTRAN Holdings third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- Net cash used in operating activities was $24.5 million in the third quarter; cash, cash equivalents and restricted cash were $71.7 million at 30 September 2026, against an $83.0 million non-current revolver and $194.2 million of convertible notes. ADTRAN Holdings third-quarter 2026 results release (8-K Exhibit 99.1) · as of
- Rosenblatt downgraded ADTRAN to Neutral with a $6.25 target; Evercore ISI kept Outperform with an $8 target; Needham kept Buy with a $9 target; B. Riley kept Buy and cut its target to $14 from $21. Analyst-action news reports · as of
- Chairman and CEO Thomas Stanton bought 150,000 shares at $4.01 on 6 November 2026 and 40,000 shares at $4.30 on 9 November 2026 in the open market. SEC Form 4 filings dated 9 November 2026 and 12 November 2026 · as of
- CFO Timothy Santo bought 17,820 shares at $4.16 in the open market on 6 November 2026. SEC Form 4 filed 9 November 2026 · as of
Sources
- ADTRAN Holdings, Inc. - Form 8-K - FY2026 · sec.gov ·
- Adtran Holdings, Inc. reports third-quarter 2026 financial results · telecomtv.com
- MarketBeat ·
Related · shared themes
CSCO
Cisco Systems
Cisco Systems' shares look more likely to lag the S&P 500 over three months because product order growth slowed to 21% from 35% despite a…
CLFD
Clearfield
Clearfield's $43.3M backlog and $195–205M fiscal 2027 sales guide point to a rebound in revenue, but the $0.25–0.46 EPS guide shows profit…
HPE
Hewlett Packard Enterprise
Hewlett Packard Enterprise's shares look more likely to lag the S&P 500 as memory costs and data-center policy risk reprice AI hardware.…
NOK
Nokia
Nokia's AI data-center sales are growing fast, but negative cash flow and a cut cash-conversion target make the shares more likely to lag…