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UPDATE: Morgan Stanley Downgrades Gogo On Unattractive Risk-Reward Outlook

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In a report published Friday, Morgan Stanley analyst Simon Flannery downgraded Gogo (NASDAQ: GOGO) from an Equal-weight rating to an Underweight rating.

In the report, Morgan Stanley says "We are downgrading Gogo to Underweight, with the stock price trading at 22x our 2016E EBITDA, well above our base case of $13.50, on 10x 2016E EBITDA of $107m. The stock has traded up 54% since reporting third quarter results, and, based on our DCF analysis, discounts a 2016E EBITDA of $265m. While we find the secular growth story around in-flight connectivity to be attractive, this comes with a fair amount of risk, which we do not believe is reflected in the current stock price. Gogo is the market leader domestically, with exclusive rights for air-to-ground spectrum, but faces technology risk and take rates continue to be modest. International is an early stage business, and faces a more competitive landscape. In the meantime, the company continues to burn a significant amount of cash."

Gogo closed on Thursday at $28.80.

Latest Ratings for GOGO

DateFirmActionFromTo
Dec 2014Dougherty & CompanyInitiates Coverage onBuy
Jun 2014MacquarieInitiates Coverage onNeutral
Jun 2014Wells FargoInitiates Coverage onMarket Perform

View More Analyst Ratings for GOGO
View the Latest Analyst Ratings

Posted-In: Morgan Stanley Simon FlanneryAnalyst Color Downgrades Analyst Ratings

 

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