Gilat's $11M Asia Pacific Order Affirms Commercial Growth Amid High Valuation Concerns

What happened

Gilat Satellite Networks announced an approximately $11 million contract for its SkyEdge platform from a leading satellite operator in Asia Pacific, highlighting ongoing demand in its Commercial Division. This win aligns with the company's strategic pivot to defense, commercial, and Peru segments as outlined in recent filings. However, Gilat's stock has doubled over the past year, trading at rich valuations of about 31 times earnings and 16 times EV/EBITDA, per the DeepValue report. Key risks, such as competition from NGSO constellations like Starlink and project delays in Peru, remain unaddressed by this single order. While the contract supports near-term revenue, it does not significantly alter the investment case given the elevated price and persistent headwinds.

Implication

This $11 million contract demonstrates Gilat's ability to secure new business in the competitive satellite networking market, supporting its strategic focus on commercial applications like in-flight connectivity. In the near term, it may boost backlog and revenue visibility for the Commercial Division, aligning with management's growth narrative. However, the amount is relatively small compared to Gilat's annual revenue of over $300 million, limiting its material impact on financials. More critically, the stock's premium valuation leaves little margin for error, with threats from NGSO constellations and standardization risks potentially eroding long-term margins. Therefore, investors should view this as a positive but incremental data point that does not justify a shift from cautious positioning without further evidence of sustained, high-margin execution.

Thesis delta

The news supports the watch item for execution in Gilat's commercial and NGSO/NTN segments, indicating progress in securing new wins. However, it does not shift the overall 'WAIT' thesis, as valuation remains stretched at over 30x P/E and core risks from competition and project uncertainties persist. A material change would require either a series of such contracts driving higher growth assumptions or a pullback in share price to improve the risk/reward profile.