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Should you invest in Iridium stock as shares advance after Q3 results?

By:
on Oct 19, 2021
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  • Iridium Communications shares spiked 4% on Tuesday after announcing its most recent quarterly results.
  • The company reported solid fiscal Q3 revenue and earnings beating consensus Street estimates.
  • The company also raised revenue guidance for FY2021 to 5%-6% growth, up from 4%-5% previously.

On Tuesday, Iridium Communications Inc. (NASDAQ:IRDM) advanced 4% after announcing its most recent quarterly results. The company reported solid fiscal third-quarter revenue and earnings, exceeding consensus Street expectations. Iridium also raised its guidance on FY2021 revenue and operational EBITDA. 

The company posted fiscal Q3 GAAP earnings per share of -$0.02, beating the analyst estimate of -$0.03. On the other hand, revenue for the quarter increased by 7.1% to $162.15 million, $8.39 million ahead of estimates.

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Iridium boosted its full-year 2021 revenue growth expectations to 5%-6%, up from the previous forecast of $4%-5%. It also expects FY2021 operational EBITDA of $375 million, compared to the previous guidance of $365-$375 million.

Should you bet on IRDM’s growth?

From an investment perspective, Iridium shares trade at a steep forward P/E ratio of 388.83, making the stock less attractive to value investors. However, analysts forecast the IRDM earnings per share to grow by a whopping 68.40% this year, before skyrocketing by 242.98% next year.

Therefore, although Iridium looks expensively valued, it could be a compelling option for growth investors.

Moreover, although the stock is up more than 45% over the last 12 months, it has plummeted nearly 20% since the 7th of September for a net year-to-date gain of just 5.75%.

Source – TradingView

Technically, Iridium shares seem to be bouncing back to recover from last month’s decline. As a result, the stock has rallied closer to the 100-day moving average in the intraday chart.

However, with shares far from reaching overbought conditions, the current rally could break above the moving average indicator. Therefore, investors could target extended gains at about $43.17, or higher at $46.06.

On the other hand, $37.79 and $34.88 are crucial support zones.

Is there time left to buy IRDM?

In summary, although Iridium shares are up more than 7% since the 7th of October, the current rebound could continue until the stock reaches overbought conditions.

Therefore, given the company’s exciting earnings growth prospects, it may not be too late to invest in IRDM shares.