Micro-cap communications technology provider Comtech gains despite Nasdaq selloff

Quotes on Comtech Telecommunications, a micro-cap provider of satellite and space communications technologies, soared almost 12% yesterday, March 10, despite a sharp drop in the Nasdaq Composite index. This came after the company announced contracts worth $26 million with defense contractor L3Harris Technologies to advance protected satellite communications programs.

Yesterday, Comtech stock jumped almost 12% to $1.92 per share even as U.S. stock markets tumbled amid recession fears. The tech-focused Nasdaq Composite fell 4%, which marked its worst performance since September 2022, while the large-cap S&P 500 and the small- and mid-cap Russell 2000 both dropped 2.7%.

Yesterday, Comtech announced multiple contracts valued at more than $26 million with L3Harris, which makes defense electronics. Comtech will supply technologies that are integrated into U.S. Army anti-jam modems, as noted in the press release.

However, in premarket trading today, March 11, Comtech stock gave up nearly half of yesterday’s gains, falling to $1.82 per share.

Comtech provides satellite and space communications technologies, as well as ground station, cybersecurity, and emergency call-routing solutions, among other things. Its clients include the military, emergency services, and telecom operators. Among the company’s latest contracts are an over $50 million deal with the U.S. Navy Information Warfare Systems Command and two agreements with wireless carriers totaling around $49 million.

In its most recent earnings, for the fiscal-2025 first quarter (ended October 31), Comtech posted $115.8 million in net sales, down almost 24% year over year, and a net loss of $148.4 million, 103 times the amount in the previous-year period.

The company’s recent performance has been unsatisfactory, admits Ken Traub, who was appointed president and CEO of Comtech on the day of the earnings release. “We are implementing a comprehensive set of initiatives to better position Comtech for the future, including improving operational discipline, streamlining operations, supporting profitable growth initiatives, undertaking a broad review of strategic alternatives and strengthening the capital structure,” he told investors, without specifying any concrete measures.

For the year to date, Comtech stock is down more than 52%. According to MarketWatch, two analysts cover the name. Their recommendations are split evenly: one “buy” versus one “hold.” Their average target price is $5.50 per share, implying upside of more than 186% versus the last closing price.