UPDATE: Raymond James Upgrades Iridium Communications (IRDM) to Strong Buy as Buybacks are Back

(Updated - February 18, 2022 7:38 AM EST)

Raymond James analyst Ric Prentiss upgraded Iridium Communications (NASDAQ: IRDM) from Outperform to Strong Buy with a price target of $51.00 (from $47.00) following good Q4 results and news the company is ramping stock buyback activity.

The analyst commented, "We are upgrading IRDM to Strong Buy, from Outperform, and raising target price to $51 (from $47) following good 4Q21 results and initial 2022 guidance, plus the company ramping stock buyback activity given the low share price and significant free cash flow generation, and we think there is more to come soon (further discussed below). Initial 2022 guidance includes OEBITDA of $400-410M (vs. previous RJE $402M), Service Revenue growth y/y of 5-7%, and reiterated mid-term target of high-single digit Service Revenue average growth from 2023-2025. With the capex holiday (i.e., minimal capex for the next decade), tax holiday (i.e., negligible cash taxes now expected through 2024), and several Term Loan B refinancings in 2021, we think FCF will accelerate in 2022 and beyond and fuel significant shareholder returns. But unlike tower companies, we still note that neither the tax nor the capex holidays are infinite (i.e., taxes ramp ~2025-2027 and significant satellite capex likely next decade). Operationally, Iridium continues growing sales and installations and launching its new broadband products, including the Certus 100 (midband) and Certus 200 (low end of their broadband) that fill the gap between Iridium’s narrowband and higher speed broadband offerings. Longer-term (i.e., five-year plan), IRDM sees the opportunity to place its satellite chips in smartphones, and we see it as the best positioned company to serve that application. So, the FCF growth story should drive significant capital returns, and we agree with the company that now is an excellent time to buy the stock."

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

Shares of Iridium Communications closed at $35.67 yesterday.

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