JPMorgan Sees Gogo (GOGO) Global Solution Being Two to Three Years Out, Stays Sidelined

May 23, 2022 8:38 AM EDT
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Price: $12.90 --0%

Rating Summary:
    2 Buy, 8 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 6 | Down: 8 | New: 15
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JPMorgan analyst Philip Cusick reiterated a Neutral rating and $19.00 price target on Gogo (NASDAQ: GOGO).

The analyst comments "On Sunday Gogo announced its partnership with OneWeb and Hughes to launch its LEO Global Broadband Service. With a global solution Gogo will now be able to target the 14-15k business aircraft outside the US – a market that is only 10% penetrated with broadband. This compares to the 24-25k BA aircraft in the US that are 30% penetrated. Previously management has noted a 2-3 year timeline after an LEO partnership is announced for the launch of service, which translates into a market launch in the back half of 2024 or early 2025. With such an underpenetrated market, Gogo has a significant market opportunity globally – especially once the company can reach an agreement with OEMs for line fitting the ESA equipment for new units. Eventually, the ideal solution would be Gogo offering a combination ATG and LEO product for consumers; Gogo’s Avance Platform can accept a second broadband solution in addition to ATG, so in theory a current L5 customer would only need to add the upward-facing LEO antenna and a small additional modem. We do not model in any impact from the launch of the global solution until we have more details on the economics/market opportunity, and full confidence in the launch. However, the announcement could potentially bring upside to longer-term estimates and may partially calm investors’ concerns regarding StarLink competition."

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 $18.01 yesterday.

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