Oppenheimer has begun covering Iridium Communications (IRDM, Financial), assigning an Outperform rating and setting a price target of $34. The firm highlights Iridium's unique role in providing essential voice and data connectivity services via its constellation of 66 low Earth orbit (LEO) satellites. This setup, along with its exclusive global L-band spectrum, is seen as a crucial asset that is challenging to duplicate.
The analyst notes that Iridium is on the cusp of tapping into significant new revenue avenues. These include direct-to-device capabilities and enhancements in internet of things (IoT) speeds and devices, as well as a new position, navigation, and timing service. Oppenheimer foresees Iridium potentially doubling its service revenue growth into the high single digits. This growth trajectory is expected to boost free cash flow per share by over 20%.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 7 analysts, the average target price for Iridium Communications Inc (IRDM, Financial) is $39.29 with a high estimate of $47.00 and a low estimate of $25.00. The average target implies an upside of 56.08% from the current price of $25.17. More detailed estimate data can be found on the Iridium Communications Inc (IRDM) Forecast page.
Based on the consensus recommendation from 8 brokerage firms, Iridium Communications Inc's (IRDM, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Iridium Communications Inc (IRDM, Financial) in one year is $52.61, suggesting a upside of 109.02% from the current price of $25.17. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Iridium Communications Inc (IRDM) Summary page.
IRDM Key Business Developments
Release Date: April 22, 2025
- Operational EBITDA: Increased 6% to $122.1 million in Q1.
- Service Revenue: Up 4% to $127.5 million, driven by IoT and Iridium PNT.
- Voice and Data Revenue: Rose 2% to $55.9 million.
- Commercial IoT Revenue: Increased 11% to $43.8 million.
- Commercial Broadband Revenue: Decreased 6% to $12.9 million.
- Hosting and Other Data Services Revenue: Up 7% to $14.9 million.
- Government Service Revenue: Increased to $26.8 million.
- Subscriber Equipment Sales: $23.1 million, down from Q1 last year.
- Engineering and Support Revenue: Increased to $37.5 million from $30.4 million.
- Cash and Cash Equivalents: $50.9 million as of March 31.
- Share Repurchase: Retired approximately 2.4 million shares at an average price of $29.48.
- Quarterly Dividend: $0.14 per share, with an increase to $0.15 per share starting Q3 2025.
- Capital Expenditures: $24.5 million in Q1.
- Pro Forma Free Cash Flow: Projected at $302 million for 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Service revenue continued to expand with the rollout of new services and subscriber growth.
- Iridium's partner ecosystem remains strong, with partners bullish on new product offerings like Iridium PNT.
- The company has successfully mitigated supply chain risks by avoiding exposure to China and expanding logistics in Europe.
- Iridium's acquisition of Satelles has positioned it well in the PNT market, with growing interest from new customers.
- The company is confident in its ability to leverage its unique network for long-term growth, supported by a strong spectrum position and technology.
Negative Points
- New tariff levels have created uncertainty, potentially impacting equipment costs and operational EBITDA.
- Commercial broadband revenue declined by 6% due to increased use of Iridium as a companion service.
- There is ongoing uncertainty regarding U.S. trade policies, which could result in significant incremental costs.
- Government service revenue growth is modest, with some deactivations related to USAID funding changes.
- The geopolitical environment and potential funding challenges for foreign governments and NGOs could impact business.
