ViaSat Inc. VSAT recently clinched a deal for upgradation of NATO UHF satellite communications (“SATCOM”) control stations to comply with the Integrated Waveform (“IW”) baseline. The upgrade will create greater situational awareness by facilitating better communications interoperability, scalability as well as flexibility across legacy and next-generation platforms.
Per the contract, NATO’s legacy UHF communications network will be upgraded to Viasat's Visual Integrated SATCOM Information, Operation and Networking (“VISION”) planning and network management platform. The Viasat VISION platform simultaneously supports all 25-kHz legacy Demand-Assigned Multiple-Access (“DAMA”) along with next-generation IW networks and services, enabling network operators to reconfigure UHF satellite networks. The interoperability between DAMA and IW platforms will enable NATO to double channel efficiency with no additional investment in the UHF space segment.
Our Take
ViaSat continuously leverages its advanced technology and competency to capture the lion’s share of satellite and wireless communications market. With the rapid proliferation of the smartphone market and subsequent usage of mobile broadband, the user demand for coverage speed and quality has increased. This in turn is fueling the demand for network tuning and optimization to maintain high data traffic. The momentous market traction of ViaSat-1 satellites, along with strategically planned ViaSat-2 and ViaSat 3 satellites, are anticipated to provide the company with a solid competitive edge over its peers, consequently bolstering growth in long run.
Moreover, the company’s in-flight Internet services is on a roll with commercial flights like Virgin America and Boeing increasingly adopting them, and this has been driving significant revenue growth over the past few quarters. The company also projects strong growth in-flight connectivity with a significant increase in shipments and installations expected going forward. Notably, the Zacks Rank #3 (Hold) company has returned 14.5% in the past six months, outperforming the industry’s growth of 5.2%.
Despite these positives, the company’s satellite services segment is highly affected by seasonality of demand due to traditional retail selling periods. In addition, any failure in promotional and subscriber retention efforts, changes in third-parties and subscriber’s approval processes can magnify the sales activity and churn rate. Further, any technical problems in relation with the performance of satellites which utilize highly complex technology and operate in the harsh environment may pose concerns for ViaSat’s future profitability.
Stocks to Consider
Some better-ranked stocks in the same space are Comtech Telecommunications Corp. CMTL, Arista Networks, Inc. ANET and Nutanix Inc. NTNX. While Comtech Telecommunications sports a Zacks Rank #1 (Strong Buy), Arista Networks and Nutanix carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Comtech Telecommunications has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 88.7%.
Arista Networks has outpaced estimates in the preceding four quarters, with an average earnings surprise of 27.5%.
Nutanix has outpaced estimates in the preceding four quarters, with an average earnings surprise of 18.5%.
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