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iridium stock

The Stock That's Outperforming the Market

industrials Jul 26, 2022

Here’s something new from the team — price target updates that come out the moment news about our favorite stocks break. 

This is simpler for some stocks than others, so we’re starting this off with one of our favorite defensive picks for this downturn: Iridium ($IRDM)

Iridium is up 3% since we updated our price target in April, meanwhile, the S&P 500 went down 12% over that same time period (and up 5% today already due to their earnings announcement).

So we’re calling that a win. 

And as this bear market evolves, Iridium looks like a better and better defensive pick that can grow despite market headwinds and even get a boost should bear season turn into a soft landing.

Iridium is adding customers at the exact right pace, to ensure it stays strong even in an extended downturn.

Let’s get into it 👇


Iridium Beats the Market:

We’re going to keep this update quick, so be sure to check out our price target adjustment for them from back in Q2 here. 

Competition is very much starting to heat up in the constellation space since access to low earth orbit is cheaper than ever.

However, with Iridium being the gold standard for mid-band and now broadband access for businesses that absolutely HAVE to be connected, it’s going to take any competitor a LOT of time and brand equity to start really eating into Iridium’s slice of the market.

So for now, we’re in that awesome phase where competitors are helping develop the market more than they are actively fighting for market share. 

Which is great since Iridium has passed through a more expensive development phase and is really starting to reap the benefits of it.

Iridium is mainly raking in cash on the equipment side as more and more customers jump on their new broadband service. 

Meanwhile, Iridium also announced a massive $330 million contract with the government. This is starting to signal to the market that Iridium will be doing even more business with the government this year — which is pushing our positive view higher. 


Iridium Beats Its Competitors (for now):

So, competitors of Iridium like Inmarsat are losing a lot of subscribers, specifically in the Maritime sector.

This could be more of a signal that demand for maritime connectivity is drying up, or it could be that Iridium will have the ability to swoop in and gain a lot of business on the maritime side of it’s business.

It won’t be as big of a top-line contributor as Iridium’s equipment and commercial line by a long shot — but it’s a new facet to the Iridium story we’re keeping an eye on. 

But as more complex, broader-band and general-use constellations like Starlink start becoming more and more complete — we’re going to be watching the broadband line really close to ensure the Iridium NEXT constellation doesn’t get left behind.   


Teasing Something Big

While it wasn’t mentioned during today’s earnings call, during Q1’s presentation Iridium teased it had something big coming down the line later this year. Large “big fish” contracts the team was in the process of finalizing.

These big fish could be more government contracts, or it could finally be Iridium getting access to Apple phones and watches like the industry has been buzzing about for years.

The moment something like this gets announced, it will pop Iridium’s more conservative valuation. We don’t price rumors into our price targets, but we want to add color to this analysis. 



Iridium is a fairly strong proof of our chief philosophy here at 

Boring is Beautiful.

While the rest of the market faces a LOT of volatility as the big tech firms report earnings and set the tone of this bear market — Iridium is forging ahead at the exact defensive pace it needs to.

Connectivity and necessity are key to a world and supply chain that are only getting more complicated. 

Price Target: $52 (38% upside) 

Current Price: $39

Target Date: Q2 2023

Rating: Overweight

Ticker: IRDM

Market Cap: $5.09B

Dividend Yield: 0%