Iridium Communications (IRDM) shares ended the last trading session 25.4% higher at $54.59. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 16% loss over the past four weeks.
The increase in share price can be attributed to Rocket Lab Corporation’s announcement of acquiring Iridium for $54 per share in a cash-and-stock transaction valued at about $8 billion. The offer represented roughly a 24% premium to Iridium's previous closing price, so investors quickly bid the stock toward the deal price.
IRDM surged because Rocket Lab offered shareholders an immediate 24% premium while validating the strategic value of Iridium's satellite network, spectrum licenses, government relationships and Direct-to-Device assets. In acquisition announcements, target companies often trade close to the agreed buyout price, and Iridium's 25% rally reflects that classic market response.
If integration proceeds smoothly, Iridium's technology could evolve faster, its Direct-to-Device ambitions could accelerate, and its position in government and industrial communications could strengthen further. While competition from SpaceX and other satellite operators will remain intense, the combined company will be significantly better positioned than either business operating independently.
For long-term investors, the acquisition transforms Iridium from a standalone satellite communications provider into a core component of Rocket Lab's ambition to become one of the world's leading end-to-end space infrastructure companies.
This satellite phone company is expected to post quarterly earnings of $0.26 per share in its upcoming report, which represents a year-over-year change of +30%. Revenues are expected to be $220.85 million, up 1.8% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Iridium, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on IRDM going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Iridium is part of the Zacks Satellite and Communication industry. Gilat Satellite (GILT), another stock in the same industry, closed the last trading session 10.3% higher at $13.02. GILT has returned -31.2% in the past month.
Gilat's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.14. Compared to the company's year-ago EPS, this represents a change of -33.3%. Gilat currently boasts a Zacks Rank of #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
