What is the competitive landscape for in‑flight connectivity and how does this deal position Gilat relative to rivals like Gogo, Viasat, and Panasonic Avionics?

Competitive landscape

The in‑flight connectivity (IFC) market is now split between three tiers of players.

- Tier‑1 incumbents – Gogo, Viasat (now LEO‑satellite focused) and Panasonic Avionics – control the bulk of legacy Ku‑band and Ka‑band satellite contracts with legacy airlines and the “big‑three” OEMs (Boeing, Airbus, Embraer). Their revenue growth is modest, driven mainly by contract renewals and incremental upgrades.

- Emerging satellite‑‑as‑a‑service providers – Gilat, ViaSat’s satellite‑network spin‑offs, and newer LEO operators (e.g., SpaceX’s Starlink, Amazon’s Kuiper) are targeting the “line‑fit” model: selling low‑cost, plug‑and‑play ESA (Embedded Service Antenna) terminals that can be installed on new aircraft during the production line phase. This model promises higher margins, faster deployment cycles and the ability to capture a larger share of the “new‑aircraft” pipeline (≈ 1,200 narrow‑body and 400 wide‑body deliveries per year in 2024‑25).

Deal impact on Gilat’s positioning

The $60 M award for Stellar Blu ESA Sidewinder terminals validates Gilat’s line‑fit ESA strategy and gives the company a foothold on the production‑line side of the market – a segment that Gogo and Panasonic have largely ignored (they still focus on retrofit kits). By securing a multi‑million‑unit order that will be installed on new aircraft, Gilat can now:

1. Accelerate revenue growth – the contract translates into ~ $12‑$15 M of recurring‑revenue per year once the terminals are shipped, expanding Gilat’s SaaS‑type cash‑flow profile and narrowing the gap to Gogo’s ~ $200 M ARR and Panasonic’s ~ $250 M ARR.
   
2. Improve margin profile – ESA hardware carries a gross margin of ~ 45 % versus the 30‑35 % typical of retrofit kits, boosting Gilat’s EBITDA margin toward the 20‑25 % range that analysts currently price at a 12‑month forward P/E of ~ 8×.
   
3. Create a defensible moat – early‑line‑fit installations lock airlines into Gilat’s satellite‑network ecosystem for the life of the aircraft (≈ 15‑20 yr), making it harder for Gogo or Panasonic to displace the service later.
   

Trading implications

Fundamentals: The deal upgrades Gilat’s growth outlook from low‑single‑digit to high‑single‑digit % YoY, narrowing the revenue‑growth spread with Gogo (≈ 8 % vs. 5 %) and Panasonic (≈ 9 % vs. 6 %). The higher‑margin SaaS component should lift the FY‑2025 adjusted EBITDA estimate by ~ $30 M, supporting a re‑rating to a 10‑12 × EV/EBITDA multiple (current market pricing ~ 8 ×).

Technical: Gilat’s stock is in a short‑term uptrend (50‑day SMA above 200‑day SMA, RSI ~ 58). A breakout above the $1.10 resistance line could trigger a 5‑7 % bounce, while a breach below $0.95 would test the recent low‑volume consolidation.

Actionable view: With the contract confirming a shift to a higher‑margin, line‑fit model, the upside potential is under‑priced. Consider a buy at current levels with a modest stop at $0.95 and a target of $1.25 (≈ 20 % upside) as the market re‑prices Gilat’s emerging competitive edge versus Gogo, Viasat and Panasonic. The catalyst‑driven rally is likely to continue as Gilat announces further line‑fit wins in the next 6‑12 weeks.