COM DEV’s acquisition of Pacific Wave is a great fit, says Paradigm

COM DEV’s (COM DEV Stock Quote, Chart, News: TSX:CDV) acquisition of California-based Pacific Wave Systems is a great pickup that is extremely well timed, says Paradigm Capital analyst Daniel Kim.

Yesterday, Cambridge-based COM DEV announced it would acquire California-based Pacific Wave Systems, a manufacturer of waveguides for the global satellite industry, for (U.S.). $20.1-million.

“This acquisition is another important step in our strategy of expanding our core space equipment business in areas of market growth,” said CEO Michael Pley. “PWS is a respected leader in the space waveguide market, and bolstered by the production expertise, scale and 40-year heritage of Com Dev, we believe they can become the dominant player.”

Kim explains that the acquisition of Pacific Wave, which counts Airbus, Thales and Space Systems/Loral among its customers, is important for COM DEV because it plans to capture market share in a satellite market that appears on the verge of an unprecedented expansion.

The analyst explains that waveguides, hollow conductive metal pipes that carry high frequency microwaves, are important because they connect all equipment on a payload. He thinks demand for waveguides will spike with the emergence of high-throughput satellites.

“We believe this is a great acquisition for CDV and the timing could not better. Going forward, the company expects double-digit EBITDA growth, which will be driven primarily by the growing demand for HTS. Longer term, we believe an integrated approach to products will help CDV secure new business with the planned launched of thousands of communication satellites,” said Kim.

In a research update to clients this morning, Kim maintained his “Buy” recommendation and one year target of $8.50.

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