Why Intelsat S.A. Stock Gained 17% in July
Shares of Intelsat S.A. (NYSE: I) stock gained 17% in July, according to data provided by S&P Global Market Intelligence . The satellite communications company continued to gain ground on expectations that it will play a key role in providing spectrum for 5G wireless services.
Shares popped following news that the FCC had voted to approve opening the 3.7 GHz to 4.2 GHz range of the C-band wireless spectrum for commercial terrestrial use. Intelsat had partnered with Eutelsat to promote the adoption of Intelsat's proposal to open the wireless range.
Intelsat stock has skyrocketed since February. That's when the company mentioned in its first-quarter earnings call that the Federal Communications Commission seemed to be receptive to a proposal to expand the legally permitted range of the C-band wireless spectrum. Here's a section from the FCC's proposal, which was ultimately unanimously approved:
And while mobile traffic is surging in sections of the United States, many communities still lack access to meaningful broadband connectivity. More intensive use of spectrum can allow wireless operators to fill in gaps in the current broadband landscape. For example, fixed wireless services provide an additional opportunity to connect rural communities and to offer competitive wireless alternatives in urban areas. Additional spectrum must be identified, however, if we are to seize the 5G future and meet the connectivity needs of all Americans.
Intelsat also published a press release on July 12 announcing that Eutelsat had signed on to support its C-band proposal.
Intelsat released second-quarter earnings results and held a conference call after the market closed on July 31. Shares gained substantially during the next trading day and are up 26% in August so far.
Sales for the second quarter came in at $537.7 million, which is up less then 1% year over year, but beat the Zacks Investment Research average analyst estimate of $533.2 million. Losses per share increased to $0.38 -- up from a loss of $0.20 per share in the prior year quarter but significantly better than the $0.54 per-share loss called for by the average analyst estimate as aggregated by Zacks.
Opening the C-band spectrum for use by mobile 5G networks will likely create major new revenue sources for Intelsat. Whether this new business will be enough to justify the stock's massive gains this year remains to be seen, but it looks like investors betting on the FCC expanding the C-band spectrum made the right move.
10 stocks we like better than Intelsat
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Intelsat wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of June 4, 2018