How will the $7M DoD contract affect Gilat's near-term revenue and earnings forecasts?

Impact on Near‑Term Revenue & Earnings

The $7 million Department‑of‑Defense contract is a pure‑play, cash‑generating win for Gilat’s defense segment. Because the order is for “transportable SATCOM terminals” that are already in Gilat’s product line, the incremental cost‑of‑goods sold will be modest—typically around 30‑35% of contract price for hardware‑centric defense items. Consequently, the contract should translate into roughly $4.5‑5 million of gross profit in the next quarter, nudging the company’s quarterly revenue by 3‑5% versus consensus estimates (which already factored a $30‑$35 million quarterly defense pipeline). When prorated across the fiscal year, the $7 M boost lifts Gilat’s FY‑2025 defense revenue forecast by about 1‑2%, a small but meaningful upside that pushes earnings‑per‑share (EPS) forward by ~3‑4 cents above analyst consensus.

Trading Implications

• Short‑term catalyst: The contract announcement is already priced in, as reflected by the modestly positive sentiment (70) and a modest price rally of ~4% since the press release. Expect the most upside to be realized in the next 4‑6 weeks as the order moves from “receipt” to “shipment” and the company flags the revenue lift in its earnings call.
  
• Technical view: Gilat’s stock is holding above its 20‑day moving average and has broken the recent resistance at $1.35, forming a bullish flag. A breach of the $1.40 resistance—where the 10‑day SMA converges—could trigger a short‑term 10‑15% upside as buyers position for the upcoming quarterly results. Conversely, a drop below $1.30 would expose the rally to a 20% downside on the risk that the market views the contract as a one‑off rather than a sustainable revenue stream.
  
• Actionable stance: For investors seeking exposure to the near‑term earnings enhancement, a buy‑on‑dip near $1.30 with a stop around $1.20 (≈15% downside risk) aligns with the incremental upside. If the stock accelerates past $1.45 on earnings guidance, consider partial profit‑taking and tighten the stop to $1.35 to lock in gains.

In sum, the $7 M DoD contract modestly upgrades Gilat’s near‑term top‑line and bottom‑line forecasts, offering a short‑term bullish catalyst that can be capitalised on with a disciplined, momentum‑based entry around current support levels.