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ViaSat (VSAT) Inks Reselling Agreement with Satcom Direct

Zacks Equity Research
Updated

Wireless equipment player, ViaSat, Inc. VSAT recently announced that it has extended existing relationship with Satcom Direct, to offer the former's full suite of in-flight connectivity (“IFC”) systems and services to large as well as mid-cabin business jets. This latest deal marks the addition of ViaSat's latest Ka-band business jet service to Satcom Direct’s IFC portfolio. With the most available data, the company’s Ka-band service is anticipated to be the fastest in-cabin business jet internet service in the market.

ViaSat-Satcom Direct Agreement

Per the agreement, Satcom Direct will resell ViaSat's high speed, high-capacity business aviation service plans which provide top speed business jet connectivity as well as an IPTV solution as part of the company’s Ka-band package. The company can improve user experiences over the most congested travel routes. Other benefits to the company from the deal include gain of support for aircraft owners as well as its customers.

Other Major Deals

Some notable contracts recently secured by the company include Lot 5 and Lot 5a contracts worth $88.3 million from the U.S. Navy Space and Naval Warfare Systems Command as well as a contract from Boeing Company BA, to supply Small Tactical Terminals ("STT"). This apart, the company also secured a contract from Lockheed Martin Corporation LMT, per which the former will deliver L-band data link communications technology for the integration and testing phase of the U.S. Navy‘s Long Range Anti-Ship Missile program.

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Our Take

ViaSat has been witnessing robust and steady growth in its Government Systems segments and in-flight connectivity, and is enjoying favorable industry trends as well. Moreover, the impressive traction of ViaSat 1-bandwith has been supporting the government and satellite business as well. 

ViaSat’s Satellite Services business is progressing well, with key metrics including steady growth of ARPU (Average revenue/user), revenue, margins and adjusted EBITDA. Moreover, growing adoption of in-flight Wi-Fi services in commercial aircrafts are proving conducive to growth of the Satellite Services business. The company has a definite competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation. This makes us believe that mobile broadband is likely to act as a key profit churner for the company, going forward.

Going forward, it is eyeing opportunities to extend broadband satellite mobility to rotary wing aircraft, as it is a large addressable market that can emerge as a key profit churner. The Zacks Rank #3 (Hold) company has returned 18.8% in the past six months, outperforming the industry’s gain of 2.2%.

However, the company’s escalating research and development costs, stiff competition and seasonality of demand have weighed down on financials in recent times. Meanwhile, its government systems segment faces threats from manufacturers of defense electronics products and systems. Increased competition results in price reductions, reduced margins and loss of market share, which has an adverse affect on the results of operations as well as financial position.

Stock to Consider

A better-ranked stock from the same space includes Sonus Networks, Inc. SONS, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sonus Networks has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 50.4%.

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Sonus Networks, Inc. (SONS) : Free Stock Analysis Report
 
ViaSat, Inc. (VSAT) : Free Stock Analysis Report
 
Boeing Company (The) (BA) : Free Stock Analysis Report
 
Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
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