Iridium to Launch Six Satellites With Relativity's Terran 1

Zacks Equity Research
·5-min read

In a bid to enhance its communications network, Iridium Communications Inc. IRDM recently announced that it has inked a strategic agreement with Relativity Space to launch six spare satellites to Low Earth Orbit (LEO). Markedly, the McLean, VA-based satellite communications company will utilize Relativity’s 3D printed launch vehicle — Terran 1 — which is considered to be the world’s first fully 3D-printed rocket, for the mission. The latest deal is likely to be a win-win situation for both the companies as the innovative technology by Relativity Space will provide reliable and flexible launch capability to Iridium’s next-gen satellite constellation in a cost-effective manner.

Based in Los Angeles, CA, Relativity Space is an aerospace manufacturer that develops its own rocket engines and launchers for commercial orbital launch services. The small-satellite launch start-up, which is the forerunner of intelligent robotics and 3D autonomous manufacturing technology, focuses primarily on designing simpler 3D-printed rockets that underscores its performance capability and responsiveness with competitive pricing. Notably, Relativity Space has signed a “Right of Entry Agreement” with the U.S. Air Force’s 30th Space Wing to launch rockets from Vandenberg Air Force Base in California, thereby augmenting its broad portfolio of infrastructure partnerships.

Markedly, this agreement allows Relativity Space and the Air Force to commence evaluating the efficacy and viability of conducting launch operations on Vandenberg launch pad. If approved, the aerospace company will offer customers with a complete range of orbital inclinations with launches to Geostationary Orbit and Medium-Earth Orbit. Currently, the company is reconstructing its payload capacity for its much-lauded Terran 1 3D-printed rocket, whose debut launch is slated at the end of 2021. In early 2019, Iridium completed the launch of its second-generation satellites with the help of Space X’s Falcon 9 rocket, which included nine in-orbit spares and 66 operational satellites.

Iridium manufactured six additional ground spare satellites and intends to capitalize on the latest collaboration with Relativity Space to launch those in the near future. Per the agreement, Relativity’s Terran 1 will loft one Iridium satellite at a time. The Terran 1 launch vehicle is all geared up for a rapid turnaround with the launch of Iridium’s satellites with utmost flexibility, performance and cost advantages. Interestingly, the contract is Relativity’s fifth launch customer agreement with Iridium. Other major customers include Momentus Space, Telesat, mu Space and Spaceflight. Apart from enhancing Iridium’s satellite communications infrastructure, the deal is expected to enable Relativity Space to capture a lion’s share of the satellite market with its best-in-class technologies. Nevertheless, the first Iridium launch with Terran 1 is not likely to occur until at least 2023. Financial terms of the deal were not disclosed.

Iridium primarily benefits from a highly lucrative recurring service revenue base driven by subscriber growth and mobile penetration stemming from an efficient operating model. The company provides unparalleled mission-critical communications and maintenance services to the military branches of the Department of Defense with global coverage and low latency. It believes in the philosophy of delivering cost-effective and competitive broadband services through its highly-lauded Iridium Certus technology, which offers a wide array of services, ranging from voice to a high-throughput L-band data connection to meet the burgeoning customer demand. Its commercial business is the main source of long-term growth as it serves a diversified customer base in various geographical areas. Further, the company’s strong product portfolio is expected to boost the top line in the long run.

Iridium has topped earnings estimates in each of the last four quarters. It has a trailing four-quarter positive earnings surprise of 24.2%, on average. The stock has returned 17.5% against the industry’s decline of 8.7% in the past year.

Iridium currently carries a Zacks Rank #3 (Hold).

Some other top-ranked stocks in the broader industry are ADTRAN, Inc. ADTN, United States Cellular Corporation USM and InterDigital, Inc. IDCC. While ADTRAN and United States Cellular sport a Zacks Rank #1 (Strong Buy), InterDigital carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ADTRAN’s bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 8.5%, on average.

United States Cellular’s bottom line surpassed the Zacks Consensus Estimate twice in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 104.1%, on average.

InterDigital’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter positive earnings surprise of 99.5%, on average.

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