Israel-based Gilat Satellite Networks (GILT) provides satellite-based broadband communication solutions. I am bullish on the stock.
Gilat has three decades of experience and is among the world’s most renowned providers of satellite-based broadband communications. Whether you’re on the ground, in the sea, or in the air, Gilat Satellite Networks probably has solutions to keep you connected through state-of-the-art satellite technology.
At the same time, Gilat remains a hidden gem on Wall Street. Somehow, the investing community hasn’t discovered the upside potential with Gilat stock. Maybe it’s just because there are flashy, hot sectors capturing people’s attention lately, and satellite-facilitated connectivity just isn’t on investors’ radars at the moment.
That’s not a bad thing, though, since it can be quite profitable to invest in solid businesses that most people aren’t paying attention to. If Wall Street decides to favor Gilat stock, the buying spree could be powerful, and you’ll only wish that you had bought at a lower price point.
As we’ll discover, Gilat stock has moved significantly higher in the past. There could be another runup, and hopefully, this time around, it will be a sustainable re-rating, as I believe Gilat stock deserves to trade in the double digits.
A Huge Deal (or Two)
In February of last year, Gilat stock shot up to $21 for a brief period of time. This might have been a result of the mania over meme stocks during early 2021. As it turned out, that rally wasn’t sustainable, and Gilat stock returned to the $7 area before the year was finished.
It just goes to show that buying stocks after massive rallies can be bad for your financial health. Often, it’s better to focus on solid businesses instead of trying to ride on the back of a short-term trend in hopes of fast money. After all, fast money can disappear as quickly as it arrives.
Recently, Gilat stock was still trading fairly close to the $7 area, and there wasn’t much hype or hoopla surrounding Gilat on Wall Street. This is actually a good thing, as the next rally could last much longer instead of being a temporary price spike.
Ultimately, Gilat stock should only move above $10 and stay there if the company is pulling in lucrative orders. Indeed, Gilat has successfully inked not just one but two big-ticket deals with satellite telecom network provider Intelsat.
First, Intelsat agreed to expand its in-flight connectivity capabilities with a strategic multi-million-dollar order for Gilat’s SkyEdge IV Taurus modems. Gilat describes this modem model as an “ultra-high-performance modem” for in-flight connectivity that’s “designed to provide Wi-Fi internet and IPTV for passengers on commercial airlines, regional aircraft, and business jets.”
Then, Intelsat reportedly selected Gilat for a multi-million-dollar deal to “provide the satellite cellular backhaul solution for a leading mobile telecommunication company in the Democratic Republic of the Congo.”
This region has a population of over 90 million people, and Gilat’s satellite-facilitated mobile communication solutions could help provide mobile services to deep rural sites in the Democratic Republic of the Congo.
Capitalizing on Opportunities
Already, we’re starting to paint a picture of an underappreciated company and an undervalued stock. Clearly, the deals with Intelsat should provide Gilat’s shareholders with a major boost of confidence in 2022.
More data demonstrates Gilat’s prime position in the satellite-based communication solutions market. After all, if Gilat’s first-quarter Fiscal 2022 results don’t persuade you to consider a long position in the stock, then you must be a very tough investor.
For one thing, Gilat reported revenue of $51.4 million, up 19% on a year-over-year basis. That’s the type of steady growth that investors should want to see, as opposed to the meme-stock frenzy that happened last year.
Plus, here’s a data point that’s massively bullish for Gilat. Reportedly, the company swung from an adjusted EBITDA loss of $1.3 million in Q1 of last year to a positive adjusted EBITDA of $2.5 million in Q1 2022. Truly, this could represent a watershed moment for Gilat.
On top of all that, Gilat seems to expect the company’s revenue growth to hold throughout the year. In particular, Gilat anticipates revenue between $245 million and $265 million during full-year 2022, which would translate to year-over-year growth of between 14% and 23%.
Gilat Satellite Networks CEO Adi Sfadia conveyed his company’s optimism, stating, “We are pleased with our results showing ongoing revenue growth and EBITDA improvement. Our performance shows that we are successfully capturing market share and capitalizing on the opportunities in our end-markets.”
The Takeaway
If Gilat Satellite Networks isn’t on your radar, it really ought to be. The company’s deals with Intelsat should prove quite lucrative, and Gilat is demonstrating growth in both revenue and adjusted EBITDA.
Of course, there’s no guarantee that Gilat stock will return to $10. Still, if Wall Street decides to buy up Gilat shares based on the company’s strengths, then double-digit prices could be just around the corner.
It’s worth noting that GILT’s Smart Score on TipRanks is a 3 out of 10, based on multiple factors, placing it in the “underperform” category. However, this highlights the stock’s poor sentiment, which could eventually turn around.
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