Outerbridge Letter. Yesterday, Outerbridge Capital announced it had delivered a letter to Comtech's BoDs seeking a review of strategic alternatives. According to the letter, while Outerbridge believes "Comtech continues to be a market leader with best-in-class products and strong growth prospects, the Company...remains significantly undervalued." Outerbridge values CMTL shares in the $32-$40 range. Who Is Outerbridge? Founded by Rory Wallace, Outerbridge is a New York-based investment adviser that typically invests across the technology and technology-impacted sectors. Probably its most well known play was at Barnes & Noble Education, where Outerbridge also pushed for a strategic review. Ultimately, the investment advisor ended up with two Board seats.The Good... According to Outerbridge, the activist admires Comtech's market leadership in exciting product lines such as satellite ground stations and enhanced 911 call routing, its consistent cash flow generation, business resiliency and potential to capitalize on significant growth opportunities. We would agree with Outerbridge.So Why the Letter? According to Outerbridge, CMTL has poor corporate governance, lackluster execution, questionable history of capital allocation, lack of executive succession planning, lack of transparency, and a woeful track record of creating value for public shareholders. We would point out that just prior to COVID, CMTL shares were trading at their highest level since 2014 and the shares have rebounded nicely since the pandemic low in March 2020.Maintain Outperform and $30 Target Price. We continue to rate CMTL shares Outperform with a $30 twelve-month price target. This target represents an EV/EBITDA multiple of 13.0 times our FY2021 adjusted EBITDA estimate of $75.1 million and 12.1x our $80 million FY22 EBITDA estimate. We believe the multiple large opportunities ahead of Comtech could be transformative. Read More >>