NEW YORK (TheStreet) -- Gogo Inc.  (GOGO) - Get Report, which provides airlines with in-flight connectivity and other wireless digital entertainment, had its 2015 and 2016 EBITDA estimates cut by Morgan Stanley to ~$20 million and ~$50 million, respectively, from its previous estimates of ~$31 million for 2015 and ~$81 million for 2016.

The firm said it lowered its estimates, reiterated its "underweight" rating, and set an $11 price target on Gogo stock based on the company's 2015 guidance, which was lower than what Morgan Stanley had previously estimated.

Gogo announced on Tuesday the sale of $5.94 million in aggregate principal amount of its 3.75% convertible senior notes due 2020.

"While the convertible provides Gogo with liquidity, and results from CA North America were encouraging, 2015 guidance was lower than our estimate," Morgan Stanley said in an analyst note.

Gogo's guidance is also "suggesting more investment in the international business than expected," Morgan Stanley added.

Shares of Gogo are higher by 2.31% to $19.96 in pre-market trading on Wednesday morning. 

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "The future of GOGO-may rest in the ability to help planes stay connected like the connected car and the connected home. It is a hot button stock and is heavily shorted because it is not profitable and some feel it never will be. But when I think about the plane crash, I think we did not get any radio communication from those pilots and the black box was damaged. GOGO could have helped here. For certain. Maybe, in other words, it is bigger than email and one day it will be able to stream Netflix-but this could be an air safety story."

Separately, TheStreet Ratings team rates GOGO INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate GOGO INC (GOGO) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has decreased by 9.1% when compared to the same quarter one year ago, dropping from -$22.11 million to -$24.11 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, GOGO INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $10.11 million or 33.55% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Currently the debt-to-equity ratio of 1.60 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Regardless of the company's weak debt-to-equity ratio, GOGO has managed to keep a strong quick ratio of 1.75, which demonstrates the ability to cover short-term cash needs.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, GOGO has underperformed the S&P 500 Index, declining 7.10% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • You can view the full analysis from the report here: GOGO Ratings Report