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GSAT Hits 52-Week High: Time to Take Profits or Hold for More Gains?
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Key Takeaways
Globalstar jumped 55.3% in a month, outperforming peers and setting a new 52-week high.
IoT subscriber growth, wholesale capacity gains and new collaborations strengthen performance.
Intense competition in the Satellite and Communications space is a concern.
Globalstar, Inc. (GSAT - Free Report) stock crafted a new 52-week high of $47.32 last day while pulling back to $47.06 at the end of the trading session. GSAT has captured investor attention with an impressive 55.3% rally over the past month, outperforming the Satellite and Communication Industry’s gain of 13.1%. The upswing is fueled by the company’s strong performance and increasing focus on Internet of Things (IoT) connectivity and private network solutions.
Price Performance
Image Source: Zacks Investment Research
GSAT gains are also better than some of its peers like Iridium Communication (IRDM - Free Report) , Viasat (VSAT - Free Report) and EchoStar (SATS - Free Report) . IRDM, VSAT are up 7.2% and 11.3% while SATS is down 0.7% respectively over the same time frame.
Investors would be contemplating now whether GSAT’s momentum has the staying power, or they should book profits and exit.
Let’s explore the key drivers behind the rally, the evolving fundamentals of Globalstar’s business, the risks that investors should monitor and evaluate whether GSAT remains a buy, sell, or hold at current levels.
GSAT Witnessing Strong Momentum
Globalstar is benefiting from continued growth in wholesale capacity services and commercial IoT revenues. Commercial IoT is witnessing an increase in the average number of subscribers, underpinned by growth in gross activations in the trailing 12 months. Strategic collaborations are also aiding in footprint expansion. It recently inked a new strategic collaboration with Conekt.ai, a connectivity management platform provider. As per the partnership, GSAT’s Band 53 spectrum and XCOM RAN private network technology solutions will be integrated with Conekt.ai’s orchestration platform, creating a unified solution for multi-network connectivity.
The company also completed a proof of concept with Parsons, demonstrating integration of its satellite network with the latter’s software-defined communications platform across three European ground stations. It was followed by a capacity access agreement, moving the partnership into the commercial phase.
The company’s terrestrial spectrum consists of Band 53 and its 5G variant, n53 and XCOM RAN. On the last earnings call, management highlighted that owning proprietary spectrum is the key differentiator in the satellite communications space, as it provides a long-term competitive advantage.
The company expects momentum to continue with innovations such as the RM200 two-way module and XCOM RAN, which could further drive the top line. The RM200 two-way module is witnessing growing traction across verticals such as oil & gas, defense and MVNOs and has been tested by more than 50 partners. With XCOM RAN, GSAT is eyeing entry into the terrestrial wireless sector, significantly broadening its total addressable market. The platform will also enable next-gen hybrid satellite-terrestrial network architectures, thereby further expanding business opportunities.
Globalstar, Inc. Price, Consensus and EPS Surprise
Globalstar is currently undergoing a comprehensive upgrade of its infrastructure and recently launched its global ground infrastructure program for the next-generation Extended MSS Network, also known as the C-3 system. As part of this program, it will add approximately 90 antennas across 35 ground stations in 25 countries, which will greatly enhance network capacity and resilience. It recently announced plans to double the size of its existing ground station in Estonia to support the third generation of its C-3 constellation. Previously, it announced the construction of another gateway infrastructure at its current ground station at OTE S.A.’s commercial teleport in Nemea, Greece and an expansion to its Singapore ground station.
It is also working with SpaceX for the deployment of nine new satellites. These satellites, under construction by MDA, are scheduled for launch first in late 2025 and then in 2026 to replace the existing constellation and ensure service continuity.
Client roster expansion is another positive. GSAT is witnessing growing traction in the government, especially U.S. federal agencies and defense markets. It reiterated its 2025 revenue outlook of $260-$285 million and expects adjusted EBITDA margins around 50%.
Headwinds Persist
In addition to macroeconomic uncertainty, the satellite and communication industry is fiercely competitive, characterized by swift technological advancements and the rising number of new entrants alongside the incumbents. This could impact GSAT’s revenue trajectory if execution is patchy. Players like Iridium, EchoStar and Viasat are eyeing significant expansion of their addressable markets amid the increasing demand for global connectivity.
Globalstar’s ongoing investment in XCOM RAN, a software-defined terrestrial wireless platform, represents both a strategic opportunity and a financial risk. In the second quarter, Globalstar invested heavily in the continued development and enhancement of XCOM RAN. These efforts, while increasing cash costs and pressuring adjusted EBITDA by approximately $1.9 million, also reduced the adjusted EBITDA margin by 300 basis points compared to the prior year.
Also, new product rollouts entail execution risks. Delays in client onboarding, technical troubles, or slower commercialization could weigh on revenue growth.
Given all these, analysts have kept their earnings estimates unchanged for the current year.
Image Source: Zacks Investment Research
Lofty Valuation for GSAT
GSAT stock is trading at a substantial premium, with a forward 12-month price/sales of 19.6X compared with the industry’s 1.54X.
Image Source: Zacks Investment Research
In comparison, IRDM, SATS and VSAT trade at multiples of 2.33X, 1.48X and 1X, respectively.
Bottom Line: GSAT Stock is a Hold
The company’s proprietary spectrum asset, innovation and collaborations position it well for long-term growth, but near-term execution and competition warrant caution. The recent surge reflects growing investor confidence in its expanding IoT footprint, but the stock’s lofty valuation suggests that much of the optimism is already priced in. Given the mix of headwinds and tailwinds, investors already owning the stock can continue to retain the stock, while new investors could benefit from waiting for a favorable entry point.
Image: Bigstock
GSAT Hits 52-Week High: Time to Take Profits or Hold for More Gains?
Key Takeaways
Globalstar, Inc. (GSAT - Free Report) stock crafted a new 52-week high of $47.32 last day while pulling back to $47.06 at the end of the trading session. GSAT has captured investor attention with an impressive 55.3% rally over the past month, outperforming the Satellite and Communication Industry’s gain of 13.1%. The upswing is fueled by the company’s strong performance and increasing focus on Internet of Things (IoT) connectivity and private network solutions.
Price Performance
Image Source: Zacks Investment Research
GSAT gains are also better than some of its peers like Iridium Communication (IRDM - Free Report) , Viasat (VSAT - Free Report) and EchoStar (SATS - Free Report) . IRDM, VSAT are up 7.2% and 11.3% while SATS is down 0.7% respectively over the same time frame.
Investors would be contemplating now whether GSAT’s momentum has the staying power, or they should book profits and exit.
Let’s explore the key drivers behind the rally, the evolving fundamentals of Globalstar’s business, the risks that investors should monitor and evaluate whether GSAT remains a buy, sell, or hold at current levels.
GSAT Witnessing Strong Momentum
Globalstar is benefiting from continued growth in wholesale capacity services and commercial IoT revenues. Commercial IoT is witnessing an increase in the average number of subscribers, underpinned by growth in gross activations in the trailing 12 months. Strategic collaborations are also aiding in footprint expansion. It recently inked a new strategic collaboration with Conekt.ai, a connectivity management platform provider. As per the partnership, GSAT’s Band 53 spectrum and XCOM RAN private network technology solutions will be integrated with Conekt.ai’s orchestration platform, creating a unified solution for multi-network connectivity.
The company also completed a proof of concept with Parsons, demonstrating integration of its satellite network with the latter’s software-defined communications platform across three European ground stations. It was followed by a capacity access agreement, moving the partnership into the commercial phase.
The company’s terrestrial spectrum consists of Band 53 and its 5G variant, n53 and XCOM RAN. On the last earnings call, management highlighted that owning proprietary spectrum is the key differentiator in the satellite communications space, as it provides a long-term competitive advantage.
The company expects momentum to continue with innovations such as the RM200 two-way module and XCOM RAN, which could further drive the top line. The RM200 two-way module is witnessing growing traction across verticals such as oil & gas, defense and MVNOs and has been tested by more than 50 partners. With XCOM RAN, GSAT is eyeing entry into the terrestrial wireless sector, significantly broadening its total addressable market. The platform will also enable next-gen hybrid satellite-terrestrial network architectures, thereby further expanding business opportunities.
Globalstar, Inc. Price, Consensus and EPS Surprise
Globalstar, Inc. price-consensus-eps-surprise-chart | Globalstar, Inc. Quote
Globalstar is currently undergoing a comprehensive upgrade of its infrastructure and recently launched its global ground infrastructure program for the next-generation Extended MSS Network, also known as the C-3 system. As part of this program, it will add approximately 90 antennas across 35 ground stations in 25 countries, which will greatly enhance network capacity and resilience. It recently announced plans to double the size of its existing ground station in Estonia to support the third generation of its C-3 constellation. Previously, it announced the construction of another gateway infrastructure at its current ground station at OTE S.A.’s commercial teleport in Nemea, Greece and an expansion to its Singapore ground station.
It is also working with SpaceX for the deployment of nine new satellites. These satellites, under construction by MDA, are scheduled for launch first in late 2025 and then in 2026 to replace the existing constellation and ensure service continuity.
Client roster expansion is another positive. GSAT is witnessing growing traction in the government, especially U.S. federal agencies and defense markets. It reiterated its 2025 revenue outlook of $260-$285 million and expects adjusted EBITDA margins around 50%.
Headwinds Persist
In addition to macroeconomic uncertainty, the satellite and communication industry is fiercely competitive, characterized by swift technological advancements and the rising number of new entrants alongside the incumbents. This could impact GSAT’s revenue trajectory if execution is patchy. Players like Iridium, EchoStar and Viasat are eyeing significant expansion of their addressable markets amid the increasing demand for global connectivity.
Globalstar’s ongoing investment in XCOM RAN, a software-defined terrestrial wireless platform, represents both a strategic opportunity and a financial risk. In the second quarter, Globalstar invested heavily in the continued development and enhancement of XCOM RAN. These efforts, while increasing cash costs and pressuring adjusted EBITDA by approximately $1.9 million, also reduced the adjusted EBITDA margin by 300 basis points compared to the prior year.
Also, new product rollouts entail execution risks. Delays in client onboarding, technical troubles, or slower commercialization could weigh on revenue growth.
Given all these, analysts have kept their earnings estimates unchanged for the current year.
Image Source: Zacks Investment Research
Lofty Valuation for GSAT
GSAT stock is trading at a substantial premium, with a forward 12-month price/sales of 19.6X compared with the industry’s 1.54X.
Image Source: Zacks Investment Research
In comparison, IRDM, SATS and VSAT trade at multiples of 2.33X, 1.48X and 1X, respectively.
Bottom Line: GSAT Stock is a Hold
The company’s proprietary spectrum asset, innovation and collaborations position it well for long-term growth, but near-term execution and competition warrant caution. The recent surge reflects growing investor confidence in its expanding IoT footprint, but the stock’s lofty valuation suggests that much of the optimism is already priced in. Given the mix of headwinds and tailwinds, investors already owning the stock can continue to retain the stock, while new investors could benefit from waiting for a favorable entry point.
At present, GSAT carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.