UPDATE: JPMorgan Upgrades Gogo (GOGO) to Overweight

(Updated - April 17, 2014 10:01 AM EDT)

(Updated - April 17, 2014 7:55 AM EDT)

JPMorgan upgraded Gogo (NASDAQ: GOGO) from Neutral to Overweight with a price target of $28.00. Analyst Philip Cusick thinks shares are attractively priced and called the recent sell-off "macro or sentiment-driven."

“At $16.99/share we believe Gogo shares offer a compelling risk-reward – our valuation of the BA segment alone is $11/share and we believe Gogo continues to have tangible opportunities in international and NA commercial markets as it accelerates the pace of RFPs." he said.

"Gogo is currently the largest communication service provider in Business Aviation – it has 5,175 satellite units (mostly voice only) and 2,047 ATG units online. We continue to believe Gogo’s ATG suite has significant advantages over satellite connectivity alternatives in BA due to lighter equipment, overnight installation and faster speeds. We expect ATG adds and shipments to remain strong through 2014 while satellite demand only gradually slows over time – we now model 700 satellite and 965 ATG units shipped in 2014, or 175 and 230 in 1Q. Additionally Gogo continues to widen its lead with new products – its ATG 2000 for turboprops and smaller jets expanded the North American market from 12k to 20k while the Text and Talk solution was upgraded on 552 systems from the Nov launch to EOY13. We expect the demand for Text and Talk to remain strong through 2014, and note that the $10k activation fee and at least $135 monthly revenue per system are essentially 100% margin. Our standalone DCF model values BA at ~$1b or $11/share and we believe there is still upside as we model minimal margin growth," added the analyst.

For an analyst ratings summary and ratings history on Gogo click here. For more ratings news on Gogo click here.

Shares of Gogo closed at $16.99 yesterday.

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