Gogo Inc. (NASDAQ: GOGO), through its subsidiaries, provides inflight broadband connectivity and wireless entertainment services to the aviation industry in the United States and internationally. It operates through three segments: Commercial Aviation North America (CA-NA), Commercial Aviation Rest of World (CA-ROW), and Business Aviation (BA).
Recent Developments
Delivered solid 2Ku performance, with 97% availability for the third quarter
Cathay Pacific and Air France launched commercial 2Ku service
Bombardier delivered CA’s first ever line-fit aircraft, an A220, to Delta Air Lines; the aircraft is 2Ku enabled and includes Gogo Vision Touch, our new wireless seatback inflight entertainment system
Gogo TV is now live on 5 airlines, including Delta Airlines, American Airlines, Japan Airlines, Japan Transoceanic Air and GOL
BA surpassed 5,000 ATG active aircraft
Recent Events
October 25, 2018. Gogo announced that Brazil’s GOL Linhas Aereas, will become the launch partner for Gogo’s Aircraft Data Service, Wireless Quick Access Recorder and Automated Turbulence Reporting – tapping into aircraft data to drive operational efficiency. Gogo’s partnership with GOL launches a new business line for Gogo, and enables GOL to access real-time information, streamline processes, and generate new service opportunities by securely bonding aircraft data through Gogo’s 2Ku high-speed global satellite connectivity system. https://finance.yahoo.com/news/gol-partners-gogo-connected-aircraft-130000685.html
October 15, 2018. Gogo Business Aviation has surpassed 5,000 systems activated across the AVANCE platform and its other ATG (air-to-ground) systems. Today, Gogo has nearly 450 Gogo AVANCE systems flying on business aircraft, including AVANCE L5 and L3, which is the fastest adoption of connectivity systems across the broadest range of business aircraft models in the history of business aviation. https://finance.yahoo.com/news/gogo-business-aviation-surpasses-5-130000871.html
About
Gogo Inc., through its subsidiaries, provides inflight broadband connectivity and wireless entertainment services to the aviation industry in the United States and internationally. It operates through three segments: Commercial Aviation North America (CA-NA), Commercial Aviation Rest of World (CA-ROW), and Business Aviation (BA). The CA-NA segment offers inflight connectivity and wireless digital entertainment solutions to commercial airline passengers flying routes that generally begin and end within North America. The CA-ROW segment provides inflight connectivity and wireless digital entertainment solutions to passengers flying on foreign-based commercial airlines and flights outside of North America for North American based commercial airlines. The BA segment offers equipment for inflight connectivity, including voice and data services to the business aviation market. Its services include AVANCE, an inflight broadband service that utilizes air-to-ground (ATG) network and ATG spectrum; Passenger Entertainment, an inflight entertainment service; and satellite-based voice and data services through strategic alliances with satellite companies. This segment serves aircraft manufacturers, owners, and operators, as well as government and military entities. The company was founded in 1991 and is headquartered in Chicago, Illinois.
Guidance
The Company reaffirms or updates its 2018 financial guidance as follows:
Total revenue of $865 million to $935 million (no change from prior guidance).
Adjusted EBITDA of $45 million to $60 million (increased from prior guidance of $35 million to $45 million).
Consolidated capital expenditures of $150 million to $170 million and Cash CAPEX of $110 million to $130 million (no change from prior guidance).
A 450 to 500 increase in 2Ku aircraft online (decreased from prior guidance of the low end of 550 to 650).
Analysts
7 Wall Street analysts have issued ratings and price targets for Gogo in the last 12 months. Their average twelve-month price target is $8.3750, suggesting that the stock has a possible upside of 10.93%. The high price target for GOGO is $15.00 and the low price target for GOGO is $1.50. There are currently 1 sell rating, 5 hold ratings and 1 buy rating for the stock, resulting in a consensus rating of “Hold.”
Date Brokerage Action Rating Price Target
7/24/2018 Raymond James Downgrade Outperform ➝ Market Perform $15.00
7/17/2018 William Blair Downgrade Outperform ➝ Market Perform
5/30/2018 Morgan Stanley Lower Target Underweight ➝ Positive $7.00 ➝ $3.00
5/21/2018 UBS Group Downgrade Buy ➝ Neutral
5/18/2018 Northland Securities Lower Target Under Perform $3.50 ➝ $1.50
3/7/2018 Guggenheim Downgrade Buy ➝ Neutral $8.75 ➝ 14.75
2/23/2018 JPMorgan Chase & Co. Downgrade Overweight ➝ Neutral
Source: marketbeat.com
Financial review
Third Quarter 2018 Consolidated Financial Results
Consolidated revenue increased to $217.3 million. Service revenue increased to $160.4 million, up 5% from Q3 2017, an acceleration from 3% year-over-year growth in Q2 2018. Equipment revenue increased to $56.9 million, up from $19.5 million in Q3 2017, due to the post-adoption impact of ASC 606.
Net loss decreased to $37.7 million, an improvement of 17% from the prior-year period, primarily related to the continued strong performance of our BA segment.
Adjusted EBITDA increased to $21.1 million, up 63% from $13 million in Q3 2017.
Capital expenditures decreased to $9.2 million in Q3 2018 from $68.5 million in Q3 2017.
Cash CAPEX decreased to $2.2 million from $53.1 million in Q3 2017, driven by an increase in installations under the airline-directed model.
Cash, cash equivalents and short-term investments were $191.2 million as of September 30, 2018.
Stock influences and risk factors
A continuing increase in revenue could act as a catalyst for GOGO shares.
If they are unable to timely remediate 2Ku quality and performance issues related to deicing fluid or other moisture entering antennas, their business, financial condition and results of operations may be materially adversely affected.
They depend upon third parties, many of which are single-source providers, to manufacture equipment components, provide services for their network and install and maintain equipment.
Stock chart
On Tuesday, November 6, 2018, GOGO shares were at $7.27 on traded volume of 7.0 million shares. The current RSI (14) is 72.24
At $7.27, GOGO shares are trading above their 50 DMA and 200 DMA of $5.39 and $6.47 respectively. The current market cap is $642.9 million.
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