Comtech Extends Term Of UHP Takeover Agreement; Street Stays Bullish

Comtech Telecommunications Corp. announced that it has extended the term for the UHP Networks acquisition until Feb. 28, 2021. Comtech, which provides products and services for advanced communications solutions, earlier expected to close the deal in the second half of fiscal 2020 (ending July 2020).

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Comtech (CMTL) had initially announced the $40 million merger agreement with UHP on Nov. 21, 2019. UHP Networks is a satellite ground station technology solutions provider, and has “developed revolutionary technology that is transforming the Very Small Aperture Terminal (“VSAT”) market.”

Comtech’s CEO Fred Kornberg said, “With end-markets for high-speed satellite-based networks significantly growing, Comtech’s acquisition of UHP is a significant step in enhancing our solution offerings for the satellite ground station market. After months of extensive testing, we believe that UHP’s innovative implementation techniques for time division multiple access (“TDMA”) technology are best-in-class.” (See CMTL stock analysis on TipRanks)

Meanwhile, Northland Securities analyst Michael Latimore believes that “CMTL has another large NG911 deal in the pipeline. The company also called out a potential “game changer” deal in the satellite earth station market. This could emerge in 6-9 months.” On Dec. 10, Latimore maintained a Buy rating and a price target of $24 (16.6% upside potential).

Like Latimore, the rest of the Street is bullish on the stock with an analyst consensus of a Strong Buy based on 3 Buys and 1 Hold. The average price target of $25.50 implies upside potential of about 23.9% to current levels. Shares have declined by about 42% year-to-date.