Comtech, however, beat its consensus EPS forecast, reporting first quarter non-GAAP earnings-per-share of 32 cents compared to the 30 cent forecast. While the company also predicted a sharp rebound in the second half of the year, but some analysts remained skeptical.

   Raymond James analyst Chris Quilty said sales of Comtech’s all-important Earth station product line declined due to weakness in both military and international cellular backhaul markets. “Comtech’s margins were also weak, dipping to 18.5 percent excluding a one-time gain, but should recover to 20 percent or higher during the second half of the year,” Quilty said in a Dec. 10 research report. “On a positive note, the Department of Defense recently certified two modems that feature the company’s carrier-in-carrier (CIC) technology, which could lead to a boost in military sales.”

   Comtech’s revenues declined 20 percent in the 2013 first quarter to $91 million, slightly missing the consensus estimate of $93 million and marking the eighth consecutive quarter of revenue loss for the company.

   Not all analysts saw the results as a warning. Financial firm JP Morgan raised its rating on Comtech based on its second straight positive (non-GAAP) EPS quarter in comparison with previous years.

   “Comtech’s quarter was about in-line with our expectations, but the stock took another beating on Friday due to dim prospects for the upcoming second quarter and lower full-year guidance,” JP Morgan said in a report. “Fundamentals in the Telecommunications Transmission business are weak, driven primarily by reduced sales of satellite modems to the U.S. government … While we do not have much visibility on the bounce in orders required to drive this recovery and we could envision another shortfall, we see the risk and reward in the stock as quite favorable.”

   Comtech’s over-the-horizon (OTH) microwave system sales increased during the first quarter, aided by a $55 million North African contract and MTTS sales to the U.S. Army. Kornberg said he expects MTTS sales to increase significantly in the 2013 full years and expressed confidence it will land another North African contract before the end of the year with initial shipments in the fourth quarter.

   While Comtech management scaled back its 2013 full-year forecast and lowered its revenue and EBITDA guidance by 7 percent and EPS guidance by 10 percent, Quilty said his firm is taking a somewhat more conservative posture. “We are lowering our full-year 2013 and full-year 2014 EBITDA estimates by 14 percent and 11 percent, respectively, due to the steep second-half improvement needed to hit management’s forecast,” said Quilty. “Comtech, however, appears to be fairly valued relative to its defense and space peer group, especially given the company’s challenging near-term growth prospects. Therefore, we are reiterating our ‘Market Perform’rating.”