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Telesat (TSAT) Moves 7.5% Higher: Will This Strength Last?

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Telesat (TSAT - Free Report) shares soared 7.5% in the last trading session to close at $29.85. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 27.7% gain over the past four weeks.

The increase in share price can be attributed to the buzz surrounding satellite and communication stocks as demand for global connectivity soars. The favorable growth backdrop offers Telesat a long growth runway for its next-generation technology.

The company continues to execute well across both its LEO and GEO satellite businesses. Momentum in the LEO business is centered on the Telesat Lightspeed program, which is witnessing increasing traction among key sectors like aero and government users. On the last earnings call, TSAT noted that the commercial pipeline was robust, with opportunities at different stages of development, and the committed backlog for Lightspeed exceeded C$1 billion at the end of the second quarter.

It is making progress on satellite development, ground infrastructure, and network software. Recently, it partnered with Calian to develop the operational data platform for the Telesat Lightspeed LEO network.

Telesat reiterated its 2025 guidance. The company expects revenues between C$405 million and C$425 million, while adjusted EBITDA is expected to be in the range of C$170 million to $190 million. Total capital expenditures are projected to be between C$900 million and C$1.1 billion, largely related to Lightspeed. 

This satellite communications company is expected to post quarterly loss of $0.94 per share in its upcoming report, which represents a year-over-year change of -1075%. Revenues are expected to be $69.96 million, down 31.1% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Telesat, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on TSAT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Telesat is a member of the Zacks Satellite and Communication industry. One other stock in the same industry, EchoStar (SATS - Free Report) , finished the last trading session 2.4% lower at $77.12. SATS has returned 17.5% over the past month.

EchoStar's consensus EPS estimate for the upcoming report has changed +3.1% over the past month to -$1.23. Compared to the company's year-ago EPS, this represents a change of -136.5%. EchoStar currently boasts a Zacks Rank of #3 (Hold).


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