Iridium Communications is the IBD Stock Of The Day as the company reported its fourth-quarter earnings Thursday. A new entry point could be in the cards for IRDM stock as shares bullishly rebound from their 50-day moving average.
Iridium provides wholesale data services via its global satellite system. With partners, it's pushing into satellite-based smartphone services.
On the stock market today, shares of Iridium jumped 3.9% to 59.31. IRDM stock has advanced 13% in 2023.
For the period ended Dec. 31, Iridium posted a 1-cent loss on an adjusted basis vs. a 4-cent loss a year earlier. Revenue rose 24% to $193.8 million, topping estimates of $174 million.
IRDM Stock: Qualcomm Partnership
For 2023, Iridium forecast service revenue growth of about 10% to roughly $588 million, ahead of views for $573 million.
A new smartphone partnership with chipmaker Qualcomm is expected to generate meaningful revenue in 2024. Iridium and Qualcomm in January announced the partnership for satellite-based, two-way text-messaging services. New smartphones will need to be equipped with Qualcomm's 5G modems.
"We expect more details regarding the transformational smartphone partnership with Qualcomm over the course of the year," William Blair analyst Louie DiPalma wrote in a note to clients Thursday.
Qualcomm and Iridium face competitors. Recent announcements from Apple and T-Mobile U.S. also involve text-based services targeting ultra-rural and dead-zone areas with no cellphone service. Apple has partnered with Globalstar while T-Mobile tapped Elon Musk's SpaceX and its Starlink satellite constellation.
"It's exciting to unveil our partnership with Qualcomm that can dramatically expand the reach of our network to new consumer smartphones using the Snapdragon Satellite platform," Iridium Chief Executive Matt Desch said in a news release. "This should be available starting later this year and cement Iridium as a big player in the emerging satellite direct-to-device market, as well as offer a path to connect other consumer applications in the future."
All-Time High For IRDM Stock
Iridium repurchased $7 million of its own stock during the fourth quarter. It has $180 million left in a buyback program. With lower capital spending ahead, analysts expect free cash flow and shareholder returns to increase.
"We think FCF will accelerate throughout 2023 into 2024 and beyond, even in a higher interest rate environment, and fuel significant shareholder returns," Raymond James analyst Ric Prentiss said in a note.
Meanwhile, IRDM stock hit an all-time high of 62.48 on Jan. 13 as investors pondered new smartphone revenue sources. The U.S. government has been Iridium's biggest customer.
Other customers are in the aviation and maritime industries. Iridium on Thursday said it ended 2022 with nearly 2 million billable subscribers, up from 1.72 million a year earlier.
Solid Relative Strength Rating
IRDM stock pulled back to 57.09 on Feb. 15 ahead of the earnings report. With Thursday's gain, IRDM stock rebounded off its 50-day moving average.
A new flat base with a 62.58 entry point could be actionable as soon as next week.
Meanwhile, the Relative Strength Rating of Iridium shares is 95 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an RS Rating of 80 or better.
The company holds an IBD Composite Rating of 78. The best growth stocks have a Composite Rating of 90 or better.
IRDM stock owns an Accumulation/Distribution Rating of B-. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
