Gogo shares target cut to $15.50 but retains buy rating

On Wednesday, Roth/MKM maintained a Buy rating on Gogo (NASDAQ:GOGO) but reduced the price target to $15.50 from $16.00. The adjustment follows Gogo's second quarter of 2024 earnings report, which slightly surpassed expectations. However, the company has revised its near-term outlook downward due to a temporary halt in customer activity as they await the launch of two significant new product cycles. These products include the Galileo satellite, expected to launch in the fourth quarter of 2024, and the 5G service, now slated for a second quarter of 2025 debut.

The delay in the 5G rollout is seen as within acceptable outcomes, provided there are no further postponements. The analyst anticipates that the introduction of Galileo and the High Definition Experience (HDX) will lead to a resurgence in Services growth starting in 2025. The firm has adjusted its projections for Gogo for the years 2024 and 2025, with the expectation that this revision will be the final one.

Gogo's recent earnings report highlighted the company's performance in the second quarter of 2024, which was marginally better than anticipated. Despite this, the company is experiencing a short-term slowdown as customers hold off on commitments until the new products are available. The analyst emphasizes that the anticipated launch of the Galileo satellite remains on schedule for the fourth quarter of 2024.

The adjustment in the price target to $15.50 reflects the revised expectations for Gogo's performance in the near term. Nonetheless, the firm's confidence in Gogo's long-term prospects is evident by the maintained Buy rating. The analyst sees the upcoming product launches as key drivers for growth in the years ahead.

In other recent news, Gogo Inc . has shown strong financial performance in the first quarter of 2024, with a 6% increase in revenue year-over-year. The company's growth has been driven by both service and equipment revenue. Gogo has also expanded its Board of Directors, appointing Monte Koch, an aviation and finance expert. Koch's knowledge and experience are expected to be instrumental in Gogo's ongoing efforts to improve inflight connectivity and expand its business aviation market reach.

Roth/MKM has maintained its Buy rating on Gogo, highlighting the company's strong position in the in-flight connectivity market and the potential of its upcoming Galileo system. Gogo's 2024 financial guidance forecasts revenue between $410 million and $425 million, and adjusted EBITDA at the high end of $110 million to $125 million.

Gogo Inc. has also achieved a significant advancement in aviation software efficiency by successfully completing over 1,000 software updates for its AVANCE system using the company's over-the-air (OTA) technology. The company is investing in its next-generation products, Gogo Galileo and Gogo 5G, which are expected to enhance service speed and significantly expand market reach. Despite some delays, these products are part of Gogo's strategic initiatives that are on track, with the anticipation of substantial free cash flow growth in 2025.

InvestingPro Insights

In light of the recent earnings report and the subsequent price target adjustment by Roth/MKM, current real-time data from InvestingPro provides a nuanced perspective on Gogo's financial standing. With a market capitalization of approximately $992.69 million and a Price to Earnings (P/E) ratio of 6.61, Gogo is trading at a lower multiple than its historical average. Despite a slight revenue decline of 1.61% over the last twelve months as of Q1 2024, the company has maintained a robust gross profit margin of 67.35%, underpinning its financial resilience.

InvestingPro Tips highlight that Gogo has a high shareholder yield and that its liquid assets exceed short-term obligations, suggesting a solid financial position for meeting immediate liabilities. Moreover, analysts remain optimistic about the company's profitability this year, which aligns with the positive long-term outlook discussed in the article. It's also worth noting that Gogo is trading near its 52-week low, which may represent a potential entry point for investors believing in the company's recovery post the launch of its new products.

For those interested in a deeper dive into Gogo's financial health and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/GOGO, which could further inform investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.