Viasat Wins Contract From U.S. Special Operations Command

Recently, ViaSat Inc. (NASDAQ:VSAT) won an indefinite-delivery indefinite-quantity (IDIQ) contract to deliver advanced equipment, systems, services and support to Special Operations Forces. Under the contract, which comes with an initial ceiling of $350 million, ViaSat will modernize ground/air situational awareness; terrestrial networking; tactical data links; intelligence, surveillance, and reconnaissance; tactical satellite communications; information assurance; network management and cybersecurity.

This award includes a range of capabilities that Viasat has assessed, tested and validated. The latest capabilities will help improve situational awareness, circumvent fratricide and improve operational mission effects.

Viasat is committed toward applying its advanced commercial technologies to develop and deploy new and advanced military operational capabilities in support of Special Operations Command's most critical missions.

ViaSat’s Government Systems business has been outstanding in recent times and is gradually gaining even greater momentum. The segment’s growth is being driven by an expanding service base and strong momentum in tactical data-link products, government mobility platforms, and secure networking products.

During the fiscal second quarter, the Government Systems performed exceptionally well (growing 6.7% year over year), driven by an expanding service base and robust momentum in tactical data-link products, government mobility platforms and secure networking products. Also, the segment reported striking revenue growth of 15%, fiscal year to date, compared with the previous year’s comparable period. Splendid growth in revenues drove strong year-to-date Adjusted EBITDA (up 30% year over year).

Investors seem to be optimistic on the company as of now, as its shares have appreciated 17.7% over the past six months, ahead of the industry’s average gain of 5.5%.

In recent quarters, ViaSat’s earnings have suffered quite a lot due to R&D expenses, but per the company, total R&D investments look set to peak this fiscal year. The primary drivers are the ViaSat-3 payload, pre-flight development and testing, and commercial in-flight connectivity, STCs and line-fit activity. This indicates that we can see more pressure on profits in the upcoming quarters. Also, the costs related to the ViaSat-2 service launch activities and preparations for the large-scale in-flight Wi-Fi ramp are estimated to further burden the bottom line.

However, strong backlog levels, bright prospects of core government business and significant demand for higher speeds of broadband connectivity in residential, in-flight, and government markets are likely to accelerate the company’s growth momentum. In addition, the ViaSat-2 satellite is anticipated to help this company fortify its foothold in new geographic markets. Thus, it may be a good time to reflect on the growth drivers of this Zacks Rank #3 (Hold) stock.

Stocks to Consider

Some better-ranked stocks in the broader space include Comtech Telecommunications Corp. (NASDAQ:CMTL) , iRobot Corporation (NASDAQ:IRBT) and ASML Holding (AS:ASML) N.V. (NASDAQ:ASML) . While Comtech Telecommunications sports a Zacks Rank #1 (Strong Buy), iRobot Corporation and ASML Holding both hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

With four back-to-back, robust earnings beats, Comtech has a striking average positive surprise of 88.7%.

iRobot Corporation has a remarkable earnings surprise history. The company recorded an average positive surprise of 92.5% over the trailing four quarters, beating estimates strongly all through.

ASML Holding has an impressive earnings surprise history for the preceding four quarters as well, beating estimates in each quarter, with an average positive surprise of 14.8%.

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