Gilat Satellite Networks Ltd.

GILT Details

Gilat Satellite Networks Ltd. (NASDAQ: GILT) is a prominent provider of satellite-based broadband communications to satellite and telecommunications operators (telcos), government and defense organizations, and large corporations worldwide. It develops and manufactures cutting-edge ground segment equipment, as well as offers turnkey solutions and services. Its portfolio includes a cloud-based very small aperture terminal (VSAT) network platform, high-speed modems, high-performance on-the-go antennas, high efficiency, and Block Upconverters (BUC).

Latest News:

• Extended Partnership: GILT stated on November 15, 2021, that Africa's largest satellite cellular backhaul network is expanding its coverage to a dozen African countries. Africa Mobile Networks (AMN) has deployed GILT's hubs and placed additional orders for its cellular backhaul terminals to serve several Tier-1 telcos across the continent.
• Expands 4G network in Asia: On October 25, 2021, GILT announced that its cellular backhaul technology helped a Tier-1 mobile operator extend its 4G network in Asia. In addition, the company's carrier-grade VSATs are being used to offer satellite backhaul to hundreds of locations across the country for the countrywide 4G network.

9MFY21 Results:

• Rise in Topline: GILT reported an increase of 22.95% in total revenues to USD 151.55 million during 9MFY21 (ended September 30, 2021) compared to USD 123.26 million during 9MFY20, due to an increase in revenue across all segments.
• Fall in Losses: It has witnessed a decrease in net losses to USD 5.06 million during 9MFY21 from USD 27.53 million during 9MFY20.
• Healthy Balance Sheet: As of September 30, 2021, the company's cash and cash equivalents stood at USD 63.77 million with no outstanding debt.

Key Risks:

• Ownership Concentration Risk: FIMI Opportunity Funds owns over 26.4% of GILT's outstanding common shares, with two additional large shareholders owning 5.25% and 7.6% as of FY20. As a result, the power of other shareholders to influence corporate matters may be limited due to such concentration ownership.
• Supplier Concentration Risk: GILT relies on a few suppliers for essential components used in its products, such as those required to build its hub systems and VSATs. Therefore, its financial health could be severely impacted if it cannot procure these components on favorable terms.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

GILT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

GILT's share price has fallen 51.10% in the past nine months and is currently leaning towards the lower band of the 52-week range of USD 5.64 to USD 22.69. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is 22.66, indicating an oversold zone. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 8.40.

Considering the significant correction in the stock price, steady dividend yield, improvement in topline, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 6.88, up 0.29% as of November 23, 2021, 11:08 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Immersion Corporation

IMMR Details

Latest News:

• Strategic Agreements: On August 12, 2021, IMMR and TITAN Haptics, a Canadian manufacturer of revolutionary haptic motors for smartphones, consoles, and touchscreen devices, signed a service agreement to bring IMMR's haptic patent licensing to mobile phones and wearables. Previously, on August 11, 2021, IMMR stated that it had expanded its haptics license for usage in the automobile industry with Stanley Electric Co., Ltd., a leading global maker of lighting and electronic components.

9MFY21 Results:

• Expansion in Topline: IMMR reported a 29.82% increase in total revenues to USD 25.34 million during 9MFY21 (ended September 30, 2021) from USD 19.52 million during 9MFY20, owing to the rise in revenues across all segments.
• Surge in Bottomline: Its net income during 9MFY21 grew to USD 11.15 million, compared to a loss of USD 2.69 million during 9MFY20.
• Healthy Balance Sheet: As of September 30, 2021, the company's cash and cash equivalents stood at USD 118.63 million with no outstanding debt.

Key Risks:

• Customer Concentration Risk: A significant portion of the company's revenue comes from a small number of customers, which is expected to be the case in the future. Samsung, for example, made for a considerable portion of the company's overall revenues in Q3FY21. As a result, if the company loses or cuts revenue from crucial clients, the company's operational performance may suffer.
• Shortage of Electronic Components: Suppose the supply of specific electronic components is affected for an extended period (as it was during the COVID-19 pandemic). In that case, the number of royalties paid to the company may be lowered, ultimately impacting its financial condition.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

IMMR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

IMMR's share price has fallen 46.90% in the past nine months and made a fresh 52-week low today. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 33.37. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 7.08.

Considering the significant correction in the stock price in the past nine months, healthy balance sheet, high profitability margins, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 5.73, down 1.21% as of November 23, 2021, 12:55 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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