Viasat’s (VSAT) new, ultra-high-capacity satellite, which began providing service to the Asia-Pacific region last month, should meaningfully boost its revenue from governments, airlines, and ship operators. The new satellite, known as Viasat-3 F3, should also enable the company to compete much more effectively in the rapidly growing satellite internet market, potentially allowing it to increase its market share in the sector and meaningfully boost Viasat stock in the process.
Moreover, another similar spacecraft previously launched by Viasat, called ViaSat-3 F2, is expected to enter service very soon and significantly upgrade the company’s satellite internet capabilities in the Americas, leaving it even better positioned to become a big winner in the satellite internet category.
Meanwhile, two fairly prominent Wall Street investment banks recently issued very positive notes on Viasat stock, and the shares’ valuation remains attractive. In light of these points, I continue to believe the shares are attractive for all investors.
The New Satellites Are Likely to Provide Viasat With Major, Positive Catalysts
Calling the Viasat-3 F3 “one of the most advanced high-throughput communications satellites ever deployed,” the company reported that the spacecraft would “deliver greater flexibility, coverage, and capacity with competitive bandwidth economics driving new growth opportunities.” The satellite “is designed to deliver more than one terabit per second of throughput capacity,” the company added.
VSAT has stated that the Viasat-3 F3 and the Viasat-3 F2 will allow airlines to “deliver next-level experiences that improve the passenger experience and drive new lines of revenue.” The company indicated that business-class passengers will also receive better internet service.
As a result of these positive changes, the company should be able to convince more airlines to adopt its internet service – CEO Mark Dankberg has indicated that only about 30% of airlines provide internet service currently – and it should be able to compete more effectively against its rivals in the sector, including Elon Musk’s Starlink, a unit of SpaceX (SPCX).
And Viasat may even be able to charge airlines more for its offerings. With Viasat’s average revenue per aircraft already rising, the new satellite should significantly boost sales and profits in its airline business, causing Viasat stock to surge.
Similarly, the company reported that the new satellites will meaningfully improve the internet service that it can provide to ship operators and governments. Consequently, it should be able to generate significantly more revenue and profits from ship operators and militaries in the medium-to-long term.
Two Investment Banks Are Bullish on VSAT Stock
Following the activation of Viasat 3 F3, Raymond James maintained an Outperform rating and a $107 price target on the name. The investment bank predicted that the new satellite would boost the company’s EBITDA starting in late 2026 or at the beginning of 2027.
Further, the launch of additional satellites could enable VSAT to finally decide whether to spin off its Defense & Advanced Technologies unit, Raymond James asserted. Shares of several spun-off companies, such as SanDisk (SNDK) and Grail (GRAL), have soared tremendously in recent years.
Further, Morgan Stanley, last month, estimated that Viasat’s spectrum alone is worth about $42 per share, as the investment bank indicated that companies launching direct-to-device service would pay VSAT for the spectrum. Morgan Stanley raised its price target to $95, meaningfully above the current stock price. However, it did also maintain an Equal Weight rating on the shares.
Valuation and the Bottom Line on VSAT Stock
Despite Viasat’s multiple strong, positive catalysts – including its net satellites, its upcoming direct-to-device offering, and likely new contracts from the U.S. military, and the potential spin-off of its DAT unit – the shares are changing hands at a very low Enterprise Value/eBITDA ratio of 8.85 times. The average EV/EBITDA ratio for the S&P 500 is about 18 times.
Because of the company’s low valuation and strong potential, the shares look very attractive to investors.
*This article is intended to be informational only; it is not financial advice.
