ADC shares up after reassuring earnings report

Shares of ADC Telecommunications Inc. rebounded Friday, erasing a few days of losses, after the maker of telecommunications gear reported quarterly results in line with expectations and announced a buyback program.

The stock climbed $1.07, or 11.7 percent, at $10.24 in afternoon trading.

Shares traded at the same level on Tuesday, and has been declining since then. On Thursday, rival Ciena Corp. predicted disappointing revenue in the current quarter, sending ADC shares lower still.

Late Thursday, ADC reported earnings of $14 million, or 12 cents per share, compared with $17.4 million, or 15 cents per share, in the year-ago period. Sales climbed to $390 million from $346.1 million for the company's fiscal third quarter ended Aug. 1.

Eden Prairie, Minn.-based ADC also stood by its revenue forecast for the fiscal year's final quarter, and said it would buy back up to $150 million of its stock.

Analyst Kenneth W. Muth at Robert W. Baird said the results and forecast were "positive given the backdrop of negative industry data points," but lowered his price target from $14 to $11. He maintained a "Neutral" rating.

Christian Schwab at Craig-Hallum Capital also trimmed earnings targets for the company, but maintained a "Buy" rating.

"There is no doubt in our mind that ADC shares are cheap trading at less than eight times our fiscal 2009 earnings estimate and slightly above book value," Schwab wrote in a client note.

ADC stock has ranged from $8.91 to $21 over the past year.