Comtech Telecommunications: Recent Outerbridge Letter Proves Singular’s Thesis



Comtech Telecommunications: Recent Outerbridge Letter Proves Singular’s Thesis

CMTL is a leading provider of secure wireless communications systems for both commercial and government customers worldwide. The products include satellite earth station modems, troposcatter systems, and wireless 911 systems.


June 28, 2021

Price (as of close on June 25, 2021)




Buy Long-Term


Price Target 



Comtech Telecommunications (CMTL)

Comtech Telecommunications (CMTL) CMTL announced solid Q3:21 results. Despite the impact of COVID-19 and a loss of government business in Afghanistan, we believe CMTL has many opportunities ahead which should lead to strong growth. We maintain our target price at blocked per share and keep our rating at Buy Long-Term.

CMTL content


Q3:21 Highlights

➢Q3:21 revenues were $139.4 million, up 3.2% compared to Q3:20, primarily due to higher sales in the Commercial Solutions segment (+16.7% YOY), partially offset by a decline in the Government Solutions (-15.5% YOY) segment.

➢ Gross margin declined 120 bps YOY to ~38% in Q3:21 versus 39.2% in Q3:20 due to increases in costs fromorder and production delays and supply chain disruptions.

➢ Adjusted EBITDA was $17.7 million or 12.7% of net revenues in Q3:21, compared to $12.4 million or 9.1% of net revenues in Q3:20.

➢ Non-GAAP net income at $6.8 million or $0.26 per share compared with $1.2 million or $0.05 per share in the same quarter last year.

➢ During Q3:21, the company won several new contracts for its satellite ground station technologies and 911 call routing solutions.

➢ For FY:21, CMTL is projecting revenues to be in the range of $580-$590 million. Adjusted EBITDA is expected to be in the range of $74-$76 million.

➢ We maintain our target price at blockedblockedblockedblocked.We keep ourrating at Buy Long-Term.



➢ A broad economic slowdown remains a key concern as a majority of the company's satellite modems are sold into lesser developed countries.

➢ The business is highly dependent on the budgetary decisions of government customers, including the U.S. government. Any cut in budgets could impact CMTL’s earnings.


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