JPMorgan analyst Sebastiano C Petti maintained a Neutral rating on Gogo Inc (NASDAQ:GOGO) with a price target of $11 on Friday.
Gogo reported strong first-quarter results and reiterated its 2025 guidance, including potential tariff impacts ($5 million impact on free cash flow).
Following the first-quarter beat, Petti raised his 2025 EBITDA by 4% to $217 million (high-end of $210 million-$220 million guidance range) as the analyst anticipated a pick-up in operating expenditure investments in the back half as well as potential top-line pressure associated with lower ATG AOL (higher suspensions).
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Petti is encouraged by Gogo’s accelerated realization of cost synergies, early demand trends for Galileo, progress towards launching 5G, continued growth in GEO broadband, and increased visibility into accelerating EBITDA and free cash flow in 2026+.
However, the analyst would like to see Gogo continue executing its growth strategy and accelerate service revenue commensurately.
Gogo’s strong first-quarter 2025 results and 2025 outlook have set the stage for ramping service revenue growth in 2026.
Additionally, Petti expects strong free cash flow generation in 2026, aided by easing program investments (opex and capex) and upside to synergy realization.
The meaningful acceleration in free cash flow should allow Gogo to rapidly de-lever over the next 12-18 months, with buybacks resuming in the second half of 2026 as leverage declines below three times (Petti modeled $40 million of buybacks in fiscal 2026 and $100 million in fiscal 2027).
Despite the above and the 45% increase in shares versus flat for the S&P 500, the analyst noted that Gogo is still a “show me” story from here, given long-term market share concerns.
Petti raised his second-quarter total company revenue slightly to $220 million on higher service revenue following strong GEO and Narrowband results. This was partially offset by weaker equipment ARPU and lighter ATG service revenue due to a tough ARPU comp (price-up last year) and lower AOL (higher suspensions).
In the updated fiscal year 2025, revenue is $906 million (versus guidance of $870 million-$910 million) on 3% higher service ($767 million) and unchanged equipment ($139 million). The latter reflects better volumes but lower pricing as Gogo prioritizes STC shipments.
The analyst raised 2025 EBITDA to $217 million, including $50 million in the second quarter.
He raised 2025 EBITDA to $217 million (versus $210 million prior), including second-quarter EBITDA of $50 million, which was driven primarily by faster synergy realization.
Petti’s 2025 free cash flow of $76 million is slightly higher due to better EBITDA, with capex and working capital unchanged. The analyst’s 2026 free cash flow is $137 million (well above the prior $123 million), aided by ramping EBITDA and lower capex.
GOGO Price Action: Gogo shares traded higher by 13.64% at $12.50 at publication on Monday.
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