JPMorgan Says Gogo's Stock 'More Than Fully Valued' After Flying Higher By 39%

Shares of Gogo Inc GOGO, a provider of broadband connectivity solutions for the business aviation market, are "more than fully valued" after rising nearly 40% since the start of 2021, according to JPMorgan.

The Gogo Analyst: Philip Cusick downgraded Gogo's stock from Neutral to Underweight with an unchanged $10 price target.

The Gogo Thesis: Gogo's 2020 sale of its commercial aviation business translated into a "more simple" business structure with an exclusive focus on business aviation, Cusick wrote in the note. But the stock's recent momentum has more to do with Gogo's status as a heavily shorted stock.

Momentum investors looking to capture further upside in Gogo's stock from the short covering fiasco may want to reconsider. The majority of Gogo's short interest is tied to its convertible debt so there is unlikely to be a further squeeze in the stock.

Related Link: 70 Stocks Moving In Monday's Mid-Day Session

"Assuming Gogo uses equity to address the convert implies an additional 38m shares or 95% increase in the float, or 16m shares if GOGO instead used equity for 42% of them and targeted leverage of 5.0x 2021 EBITDA," the analyst wrote.

Meanwhile, Gogo hasn't communicated to investors its 5G upgrade plans, although a launch should come in 2022, the analyst wrote. The network upgrade should set the company back $100 million and this would imply 2021 free cash flow would be "significantly negative."

Gogo could partner with a Low Earth orbiting satellites (LEOs) provider to expand its offerings, but such a catalyst "seems quite far away" and investor excitement will likely be limited in the meantime.

GOGO Price Action: Shares of Gogo were trading lower by more than 6% Monday afternoon at $12.51.

(Photo: Gogo)

Posted In: 5GBusiness JetsJPMorganPhilip CusickwifiAnalyst ColorDowngradesSmall CapAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.