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Barclays Upgrades Iridium to Overweight on Strong Second Quarter and Positive Outlook
Iridium Reports Record High Operational EBITDA Despite Second Quarter Net Loss
Barclays upgraded satellite communications company Iridium to overweight on Thursday, citing its "solid" second quarter performance and attractive outlook. Despite posting a net loss of $30.7 million for the second quarter, Iridium's operational EBITDA rose by 9% to reach a record high of $115.8 million. The loss was primarily due to a write-off of extra satellites that followed a successful launch in May. Despite this, Barclays believes that the stock has a 29% upside potential and considers the risk/reward ratio to be attractive.
Barclays Sets $65 Price Target, Indicates 29% Upside Potential
Barclays has set a price target of $65 for Iridium's stock, which represents a 29% increase from Thursday's closing price of $50.58 per share. This indicates their confidence in Iridium's future performance and growth prospects. Iridium's stock has remained flat year-to-date, but Barclays believes that the company's opportunity in the nascent direct-to-device (D2D) satellite market will be a strong source of revenues. They forecast that the D2D market could generate approximately $90 million for Iridium by 2027.
Barclays Bullish on Iridium's Potential in the Direct-to-Device Satellite Market
Barclays analyst Mathieu Robilliard wrote in a note to clients that Iridium's potential in the direct-to-device satellite market represents a significant opportunity. While it may take some time for the revenue from this market to grow, Barclays views this as a positive long-term prospect for Iridium. They believe that Iridium's position in this market will enable them to generate substantial revenues in the future. Overall, Barclays' bullish outlook on Iridium is based on their belief in the company's ability to capitalize on the direct-to-device satellite market and deliver strong financial performance in the years to come.
Conclusion: A Hot Take on Iridium's Upgrade and Its Impact on New Businesses
Barclays' recent upgrade of Iridium to overweight based on its strong second-quarter performance and positive outlook has implications beyond the satellite communications company itself. This development highlights the potential opportunities in the direct-to-device (D2D) satellite market, which could impact new businesses entering the industry.
Despite Iridium's second-quarter net loss of $30.7 million, its operational EBITDA reached a record high of $115.8 million, prompting Barclays to outline a 29% upside potential for the stock. This bullish outlook is tied to Iridium's position in the nascent D2D satellite market, which Barclays believes will be a robust revenue source in the years to come.
For new businesses eyeing the satellite communications sector, Barclays' upgrade of Iridium underscores the importance of paying attention to the D2D market. Although revenue growth in this market may take time, its long-term prospects are viewed positively by industry analysts.
The upgrade also serves as a signal to new businesses that there is ample room for growth and innovation in satellite communications. Companies entering this space should carefully analyze the potential revenue streams and market opportunities, focusing on emerging markets like D2D.
Overall, Iridium's upgrade by Barclays indicates that developments in the satellite communications industry have the potential to impact new businesses. The D2D market represents an exciting and growing field, and companies entering this sector should consider the opportunities it presents for revenue generation and long-term success.
Article First Published at: https://www.cnbc.com/2023/07/27/barclays-buy-satellite-stock-iridium-irdm-says-29percent-upside-ahead.html.svg)
