What Happened?
Shares of satellite communications provider fell 3.3% in the afternoon session after Raymond James downgraded the stock to "Outperform" from "Strong Buy" and significantly lowered its price target.
The price target was adjusted to $26, down from the previous $39. The downgrade follows a strategic move by rival SpaceX Starlink, which announced the purchase of spectrum rights to intensify its push into the Direct-to-Device market. This acquisition has heightened competitive concerns within the satellite communications sector, pressuring Iridium's stock, which had already fallen approximately 29% this week. The analyst action reflects growing uncertainty about Iridium's position in an increasingly competitive landscape.
The shares closed the day at $17.79, down 3.3% from previous close.
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What Is The Market Telling Us
Iridium’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 2.5% on the news that the Consumer Price Index (CPI) report bolstered expectations for a Federal Reserve interest rate cut despite showing persistent inflation. The August CPI data, a key measure of inflation, showed prices rose 2.9% annually, slightly more than economists expected. While inflation remains above the Federal Reserve's 2% target, investors were focusing on other signs of a cooling economy, particularly a weakening labor market. As a result, the market widely anticipated that the Fed would cut interest rates at its September meeting to support the economy. Investors priced in multiple rate cuts by year-end, which boosted market sentiment and sent Treasury yields lower.
Iridium is down 39.8% since the beginning of the year, and at $17.79 per share, it is trading 47% below its 52-week high of $33.57 from October 2024. Investors who bought $1,000 worth of Iridium’s shares 5 years ago would now be looking at an investment worth $636.72.
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