Noble Reaffirms Comtech Telecom (CMTL) at 'Buy'; Positive on Shift Towards Organic Growth
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Noble Financial affirms Comtech Telecomm (Nasdaq: CMTL) at Buy with a price target of $20 following FY16 results reported late last week, still seeing shares as oversold.
Analyst Mark Jordan commented:
- [FY16] Revenues came in below expectations, but significant margin improvement and lower than expected acquisition related costs led to stronger than anticipated earnings of $0.14 per share, compared to an expected loss of $0.16.
- Bookings of $202.8 million gave a healthy quarterly book-to-bill ratio of 1.33x, compared to an average of 0.96x for the first three quarters of the year. Even excluding the impact of the $45 million NG 9-1-1 contract with Washington state, the ratio would have been above 1.0x as the company saw strong bookings across multiple business lines.
- The catalyst for the recent change in management was the board of director's desire to shift from the pursuit of inorganic growth to operational excellence, focusing on value added revenues, margin enhancement and free cash flow improvement. We are supportive of this shift in strategy, and believe it can create sustainable long term value.
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