BMO Capital maintained an Outperform rating on Comtech Telecom (NASDAQ: CMTL), and cut the price target to $16.00 (from $18.00), following the company's 1Q earnings report. Reported revenue was $136 million, lower than the consensus estimates of $131 million, owing to weaker Government business compared with our expectations. FY2017 guidance was unchanged, as management expects revenue of approximately $600 million, EPS of $0.30, and adjusted EBITDA of $70 million.

Analyst Tim Long commented, "Comtech reported a mixed quarter, with lower revenue offset by better margins to yield an adjusted EBITDA that was in line with our above-consensus estimate of $10 million. Management’s guidance is unchanged, although continued softness in Q2 will mean a back-end loaded year. However, we are encouraged by continued pro forma backlog growth, which puts guidance within reach, as well as management’s decision to pursue fewer low-margin deals. Our FY2017/FY2018 EPS estimates go to $0.32/$0.55 from $0.27/$0.44. For FY2017, we now model adjusted EBITDA of $68 million."

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Shares of Comtech Telecom closed at $12.75 yesterday.