ViaSat Inks Agreement With AirSatOne, Wins 2 Other Deals

ViaSat, Inc. (NASDAQ:VSAT) recently announced that satellite communications service provider, AirSatOne, is set to become the former’s reseller partner to improve in-flight Internet service offered to large-cabin, business-aviation aircraft. The broadband services and technology firm also clinched a couple of contracts from leading airline companies, reflecting the underlying strength of its Government and Satellite Services businesses.

ViaSat-AirSatOne Arrangement

Per the reselling agreement, AirSatOne will have immediate access to reselling ViaSat's entire range of business aviation products. Leveraging on AirSatOne’ aviation satcom expertise, ViaSat can improve user experiences over the most congested travel routes. Other benefits accruing to ViaSat from the deal include gain of competitive airtime packages, support for aircraft operators and 24/7 support for its customers.

Clinching of Deals

ViaSat announced that it has inked a contract worth approximately $20M, including exercisable options with The Boeing Company (NYSE:BA) . This requires the company to deliver KOR-24A Small Tactical Terminals (STT) for integration into Boeing's AV-8B Harrier attack aircraft for United States Marine Corps (USMC) and international customers.

Also, airline company, Icelandair inked a new partnership with ViaSat to offer powerful in-flight connectivity and Internet streaming service to passengers. Icelandair intends to leverage on ViaSat’s latest generation (Gen-2) in-flight Internet system and its much awaited ViaSat-2 satellite communications system, set to be launched on Jun 1, 2017.

Our Take

Despite thriving Satellite and Government Service businesses, ViaSat’s shares have lost 3.6% year to date, comparing unfavorably with the Zacks categorized Wireless Equipment industry’s average gain of 1.6%. Escalating research and development (R&D) costs, stiff competition and seasonality of demand have weighed down on financials in recent times.

It will be interesting to see how the market reacts to the company’s fiscal fourth-quarter 2017 results. On the positive side, increasing adoption of satellite networking, in-flight Wi-Fi services in commercial aircraft data links and encryption-product based businesses are expected to drive the Zacks Rank #3 (Hold) company’s long-term growth.

ViaSat remains optimistic about its Satellite business as leading airline companies continue to scout for new ways to utilize high-capacity satellite solutions to maximize passenger satisfaction. We also believe that the collaboration with Eutelsat, which has helped the company expand its customer base, will act as a major catalyst, stoking growth going forward.

Stocks to Consider

Better-ranked stocks in the same space include Applied Materials, Inc. (NASDAQ:AMAT) and Ubiquiti Networks, Inc. (NASDAQ:UBNT) . While Applied Materials sports a Zacks Rank #1 (Strong Buy), Ubiquiti Networks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

With four back-to-back beats, Applied Materials has an average positive surprise of 3.3% for the trailing four quarters.

Ubiquiti Networks has managed to beat earnings estimates thrice over the trailing four quarters. It has an average positive surprise of 13.3%.

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