Gogo Inc. GOGO at its Analyst and Investor Day said that it now expects full year adjusted EBITDA at the higher end of its previously announced range.
Investors reacted positively to the news as shares jumped 6.1% in the last trading session, touching a day high of $23.20, before closing a notch lower at $23.16. CapitalIQ consensus estimates Gogo's full-year EBITDA at $17.2 million.
For the full year ending Dec 31, 2015 Gogo earlier expected adjusted EBITDA in the range of $15 million to $25 million.
However, it did not mention any other changes to its 2015 guidance. It continues to expect total revenue of $485 million to $505 million with CA-NA revenue in the range of $300 million to $320 million. BA revenues are likely to be in the range of $170 million to $180 million and CA-ROW revenues in the $10 million to $15 million range. It expected cash capex of $100 million to $120 million.
Gogo, headquartered in Itasca, IL, is a global aero communications service provider. It offers in-flight connectivity and wireless digital entertainment solutions. It operates through Commercial Aviation and Business Aviation segments. The company provides equipment for in-flight connectivity with voice and data services and wireless digital entertainment solutions.
The company has been taking a number of growth initiatives, which are expected to boost its profitability and help it to win market share, globally.
Gogo most recently teamed up with Latin American carrier GOL Linhas Aereas Inteligentes S.A. GOL to offer Internet facility onboard through satellite connection. The launch of Wi-Fi connectivity will be the first in South American flights.
Following the announcement, UBS analysts raised their target price to $26 and reiterated a Buy rating on the stock as they believe that the deal with GOL is a positive for Gogo. The deal will provide it access to the Latin American market.
Also, in May, Gogo received the first Supplementary Type Certificate (STC) from U.S. Federal Aviation Administration (FAA), which will enable it to test its next generation 2Ku satellite connectivity system in its own 737-500 flying lab. The company expects to get the second one in July, which will allow it to launch its 2Ku technology commercially later this year.
2Ku is Gogo’s next generation satellite technology, which can offer peak speeds of over 70 Mbps to the aircraft, which is nearly 20 times the bandwidth provided by its first generation Air to Ground solution in the U.S.
Gogo expects the technology to be advanced in terms of coverage, cost, capacity and reliability. It expects the technology to be widely accepted and consequently extend its footprint worldwide.
Gogo currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the sector include Synacor, Inc. SYNC and PetMed Express, Inc. PETS, both carrying a Zacks Rank #2 (Buy).
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