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Iridium Communications Inc (NASDAQ:IRDM) commenced its NEXT satellite services in early February and already has hundreds of subscribers on the new network. The company can grow revenue, EBITDA and FCF by adding new NEXT products and services, according to Raymond James.
The Analyst
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Ric Prentiss downgraded Iridium Communications from Strong Buy to Outperform and raised the price target from $25 to $30.
The Thesis
The downgrade is due to a shift in valuation methodology, but still reflects the company's investment in Aireon, Prentiss said in a Wednesday note. (See his track record here.)
After completing the NEXT constellation launch campaign earlier this year and with the enhanced mobile satellite services contract from the U.S. government likely to be renewed in May, the company is considering options to refinance its debt to a more flexible facility, the analyst said.
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Iridium is likely to shift refinancing in the back half of 2019 from the construction phase credit facility to operational phase debt, Prentiss said.
The credit facility could be replaced with $1.4 billion of debt at a 6.75-percent rate by the end of the second quarter, and the $360-million high-yield debt may be taken out in the second quarter of 2020, the analyst said. The company is likely to use the debt capacity to repurchase shares, he said.
Price Action
Iridium Communications shares were falling by 5.3 percent to $26.63 at the time of publication Wednesday.
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Photo courtesy of Iridium Communications.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.