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Viasat (VSAT) Upgrades its KG-142 Network Encryptor Device

Zacks Equity Research

Viasat Inc. VSAT recently announced the upgrade of its KG-142 network encryptor device (KG-142) for government and military customers. Notably, this advanced version is designed to support the shift to cloud-centered communications, which will offer further flexibility to customers apart from reducing the size, weight and cost for cloud networks.

As part of Viasat’s portfolio of National Security Agency (“NSA”) certified network encryption solutions, the KG-142 ensures secure transmission of the government and military customers’ sensitive information.

In fact, government agencies can protect high priority and secret compartmented information for high-bandwidth applications like cloud computing and big data processing with the help of the KG-142. This, in turn, facilitates delivery of a network-efficient protection for Layer 2 Ethernet communications. The KG-142 also offers greater flexibility, enabling customers to operate up to 32 simultaneous peer-to-peer connections over one 100 Gigabits per second (Gbps) or one to four 10 Gbps Ethernet channels.

Competent to work at speeds ranging from 20 to 200Gbps aggregate, the advanced KG-142 supports multiple point-to-point connections as well. As a matter of fact, this helps in meeting the growing volume, velocity, and variety of data transmission requirements safely.

Our Take

Viasat enjoys a leading position in the satellite and wireless communications market. With the rapid proliferation of the smartphone market and usage of mobile broadband, user demand for coverage speed and quality has increased significantly. This, in turn, is fuelling the demand for network tuning and optimization to maintain high data traffic. Encouragingly, the company’s blue-chip customer base, which comprises the U.S. Department of Defense, civil agencies, allied foreign governments, satellite network integrators as well as large communications service providers and enterprises, adds to its strength.

Moreover, the company’s Satellite Services business is progressing well with key metrics including steady growth of ARPU (average revenue per user) and revenues showing impressive growth. Currently, ARPU is growing on the back of solid retail distribution network, which accounts for a growing proportion of high value and high bandwidth service plans subscriber base.

Viasat also has a competitive advantage in bandwidth economics, global coverage, flexibility and bandwidth allocation, which makes it believe that mobile broadband will act as a profit churner.

 

However, in the past six months, this Zacks Rank #3 (Hold) stock has lost 3.3% against the industry’s 0.9% growth. Additionally, the company expects to incur huge R&D expenses related to the commercial launch of Viasat-3 satellites.

Key Picks

Some better-ranked stocks in the same space are Ubiquiti Networks, Inc. UBNT, Juniper Networks, Inc. JNPR and Harris Corporation HRS. While Ubiquiti Networks sports a Zacks Rank #1 (Strong Buy), Juniper Networks and Harris carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ubiquiti Networks surpassed estimates thrice in the trailing four quarters, the average beat being 11.30%.

Juniper Networks exceeded estimates in each of the trailing four quarters, the average being 10.99%.

Harris surpassed estimates in each of the trailing four quarters, the average being 7.06%.

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