Gilat satellite networks (GILTF) Message Board

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Technology Stocks : Gilat satellite networks (GILTF)

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To: jay silberman who wrote (99)	8/15/1997 1:17:00 AM
From: jay silberman	of 350

Analyst report from Lehman Bros: Headline: Gilat Satellite Networks:Reports Strong 2Q97,Weakness Provides Buying Opp Author: Tim Luke 1(212)526-4993 Company: GILTF Industry: TELECM Ticker : GILTF Rank(Prev): 2-Outperform Rank(Curr): 2-Outperform Price : $34 1/8 52wk Range: $38-17 Price Target: $45 Today's Date : 08/06/97 Fiscal Year : DEC ------------------------------------------------------------------------------ EPS 1996 1997 1998 1999 QTR. Actual Prev. Curr. Prev. Curr. Prev. Curr. 1st: 0.24J 0.28A 0.28A - -E - -E - -E - -E 2nd: 0.26A 0.33E 0.34A - -E - -E - -E - -E 3rd: 0.33A 0.39E 0.39E - -E - -E - -E - -E 4th: 0.43A 0.50E 0.50E - -E - -E - -E - -E ------------------------------------------------------------------------------ Year:$ 1.22A $ 1.50E $ 1.51E $ 1.90E $ 1.90E $ - -E $ - -E Street Est.: $ - -E $ 1.50E $ - -E $ 1.88E $ - -E $ - -E ------------------------------------------------------------------------------ Price (As of 8/4) : $37 1/16 Revenue (1997) : 101.8 Mil. Return On Equity (97): 17.6 % Proj. 5yr EPS Grth : 30.0 % Shares Outstanding : 10.3 Mil. Dividend Yield : N/A Mkt Capitalization : 380.57 Mil. P/E 1997; 1998 : 24.7 X; 19.5 X Current Book Value : $9.07 /sh Convertible : Yes Debt-to-Capital : 0.0 % Disclosure(s) : C ------------------------------------------------------------------------------ * Yesterday, Gilat Satellite Networks reported impressive 2Q97 results with earnings of $0.34 versus $0.30 in 2Q96 (restated for Skydata acqusition) above our consensus estimate of $0.33. * Revenues grew an impressive 40% YoY and 20% QoQ to $25.3 million coming in comfortably ahead of our estimate of $23.2 million. Strong growth across all product lines. Book to Bill substantially above 1. Visibility remains excellent for 2H97. * Gilat won breakthrough order for Rural Telephony system in Chile. Gross margins came in above est of (41.3%) at 42.9% vs. 39.5% 1Q97 while R&D and SGA investments moved higher. Bal Sheet improved. * We believe yesterday's weakness caused by management comments regarding possible review of strategic reseller arrangement with GE beginning in 1999 may have provided opportunity to acquire the shares. * Following strong results, we are reiterating our positive 2-Outperform rating. Believe outlook for Gilat remains robust. Price target of $45 represents 23-25x our unchanged 1998 estimate of $1.90. ------------------------------------------------------------------------------ Strong Revenue Growth, Good Visibility During 2Q97 Gilat's revenues grew 40% year over year and 20% sequentially to $25.3 million comfortably above our estimate of $23.2 million. Gilat continues to see strong growth across all of its product lines with the core TwoWay VSAT continuing to drive sales and the new products gaining momentum. While the company does not disclose backlog on the quarterly basis, Gilat did confirm that the book to bill ratio was substantially greater than one for 2Q97. We consider that with backlog levels (including letters of intent) ahead of the $40 million level estimated at the end of 1Q97, the visibility in 2H97 remains excellent. Breakthrough Order for Global Village Telecom During 2Q97 Gilat secured a breakthrough order for its rural telephony initiative. Global Village Telecom has set-up a Chilean company after winning an award to to provide basic telecommunication services for over 42 regions and approximately 1,500 villages using its satellite payphone infrastructure. We believe that this $5 million contract represents an important milestone for this initiative underlining the system's considerable attraction in terms of time to market and cost effective delivery of service. We are also encouraged

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