The stock of cloud-based satellite-based broadband provider Gilat Satellite (NASDAQ: GILT) is down over 50% from its 2021 highs in February 2021. The…
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Cloud-based satellite-based broadband provider Gilat Satellite (NASDAQ: GILT) The stock is down more than 50% from its 2021 highs in February 2021. The provider of satellite-based broadband is supporting the reopening and the 5G rollout. The global provider sees an improvement in its weakest segment, in-flight connectivity (IFC), as travel resumes with the acceleration of COVID vaccinations. The aviation industry is recovering in a V-shape as travel volume resumes much faster than analysts anticipated. Gilat is a major benefactor and should be reflected in the quarters to come. Prudent investors looking to play with the tailwinds of the aircraft rebound and 5G megatrend after a post-pandemic reopening can watch out for opportunistic setbacks in Gilat Satellite stocks.
Q1 FY 2021 earnings release
On May 4, 2021, Gilat released its financial results for the first quarter of 2021 for the quarter ended in March 2021. The company reported earnings per share (EPS) of $ (-0.09) compared to a loss of $ (-0.03) a year ago. Revenue decreased year-on-year (YoY) to (-6%) to $ 44.7 million, compared to $ 47.7 million in the year-ago quarter. The effect of a weak IFC recovery, a less favorable exchange rate and higher spending was the cause of the shortfall. Adi Sfadia, CEO of Gilat Satellite stated, “We believe this growth trend will continue into 2021 and expect sequential quarterly growth and increasing profitability over the course of the year. Looking ahead, 2022 is expected to see significant improvements in both sales and profitability with the boom at IFC, Cellular Backhaul and NGSO. ”He details a new agreement:“ As evidence of the strong momentum we are seeing, I am thrilled to announce that we have entered into a multi-ten million dollar strategic mega-agreement with a major government company in the Asia Pacific region, including the potential for significant project expansion. I believe we will see more major strategic deals in the near future. ”He continued,“ Given the many opportunities we see ahead, we are investing significant efforts in research and development to capitalize on those opportunities and our future growth to accelerate. We anticipate that NGSO, IFC and Cellular Backhaul will be the main market segments driving this growth in 2021 and beyond, and we also see great potential for the defense business to support our growth more meaningfully than in previous years past."
Take away conference calls
Gilat CEO Sfadia set the tone: “We have very important projects, mainly in LEO and MEO constellations, in which we are currently investing considerable R&D efforts and which will enable us to generate significant sales in the coming quarters … Als As a leader in the NGSO and VHTS market, we see significant growth potential for Gilat, encompassing hundreds of millions of dollars in market opportunity. "He continued," We believe we are well positioned to generate additional NGSO and VHTS Win business when the opportunities mature. Gilat continued to lead sales in the backhaul industry and is the leader in modem shipping with a market share of around 40%, according to a new report from industry analyst NSR. According to a Gilat analysis based on the NSR report, we continue to lead the 4G market with 80% market share. In addition, as we reported, Gilat received over $ 5 million from the Tier 1 cellular network operator in Japan to expand cellular backhaul to quickly cover rural areas and support emergency response in the event of natural disasters. We are also seeing a significant increase in follow-up orders from our Tier 1 MNOs around the world, including Latin America, Europe, Australia, and leading wireless carriers in Japan. "
Opportunities in 5G
CEO Sfadia pointed out the opportunities of 5G: “We see the introduction of 5G as a market with great potential for Gilat. The addressable market size is projected to reach more than $ 300 million per year for satellite equipment for 4G and 5G cellular backhaul only and more than $ 6 billion per year for satellite equipment and services, including satellite capacity, in a few years. We believe that the rollout of 5G initially in cities will drive significant 4G deployment versus satellite backhauling in suburban and rural areas where terrestrial coverage is less feasible. In the second phase, the 5G use of the satellite was also extended to rural areas, which promises universal coverage. "
APPLIES Opportunistic pullback levels
Using the rifle tables in the weekly and daily timeframe allows for an accurate view of the playing field for GILT stocks. The weekly rifle chart is in consolidation but started falling as the weekly 5-period MA drops to $ 9.95. Weekly stochastics will stall with the 40s band waiting to form a cross-down or mini-pup. The weekly formed a sell trigger of the Market Structure High (MSH) below the break below $ 15.09. The drop below the $ 10.01 Fibonacci (fib) level could be the start of a downtrend on the week. The weekly Low market structure (MSL) Buy above $ 8.87 triggered which is a line in the sand for bulls. The daily rifle chart formed a consolidation breakdown with a falling 5-period MA resistance at $ 9.38 and lower daily BBs at $ 9.22. The daily stochastic falls towards the 20 band. Prudent investors can look to opportunistic pullback levels at $ 8.96 fib, $ 8.32 fib, $ 8.02 fib, $ 7.40 fib, $ 6.49 fib, and $ 5.98 fib. The upward curves range from $ 11.15 fib to $ 16.32 fib.
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