Tuesday, on October 15, 2024, Needham, a well-known investment firm, adjusted its outlook on ViaSat shares (NASDAQ:VSAT), a global communications company. The firm's analyst reduced the price target for ViaSat's shares to $19.00, down from the previous $28.00, while still holding onto a Buy rating for the stock. This change comes as the company prepares for its Defense and Advanced Technologies (DAT) Investor teach-in scheduled for October 17th.
The analyst at Needham revised their financial model for ViaSat to incorporate a sum-of-the-parts (SOTP) valuation. This new valuation takes into account the challenges the company faces, including increased competition and ongoing supply chain issues. These issues are partly attributed to production difficulties at key suppliers Boeing (NYSE:BA) and Airbus, which have ripple effects throughout the industry.
ViaSat's recent financial maneuvers were also a factor in Needham's reassessment. The company's debt capital refinancing has been reflected in the updated model, influencing the firm's decision to lower the price target. Needham's revised target is based on a SOTP valuation that applies a 4x fiscal year 2026 EV/EBITDA multiple on ViaSat's Communication Services business and an 8x FY26 EV/EBITDA multiple on the DAT business.
The analyst noted that the new price target of $19.00 is a result of these combined factors. The valuation reflects the current business environment and ViaSat's financial strategy, including the impact of the company's recent debt refinancing efforts. Despite the reduced target, Needham's continued Buy rating indicates a belief in ViaSat's underlying value and long-term potential.
Investors and market watchers are now looking forward to ViaSat's upcoming DAT Investor teach-in for further insights into the company's strategies and performance in the face of industry headwinds. The event is expected to provide additional information on how ViaSat plans to navigate the competitive landscape and supply chain complexities.
In other recent news, Viasat Inc. has been making significant strides in the global communications industry. The company has initiated service delivery to the U.S. Marine Corps using its ViaSat-3 F1 satellite, marking the first governmental utilization of the network. Moreover, Viasat has introduced major performance upgrades to its Jet ConneX service, aiming to enhance the in-flight connectivity experience for business aviation.
On the financial front, Viasat has issued $1.975 billion in senior secured notes and secured a $33.6 million contract from the U.S. Air Force Research Laboratory for the development of Active Electronically Scanned Array systems. The company has seen a substantial increase in revenues, which have tripled to $4.5 billion.
In terms of analyst reviews, Deutsche Bank has reiterated its Hold rating on Viasat's stock, while JPMorgan has downgraded the company from Overweight to Neutral. These assessments come amidst recent developments in the inflight connectivity market, where competitor Starlink has gained approximately 2,500 aircraft contracts.
These are among the recent developments for Viasat as it continues to navigate the competitive landscape of the global communications industry.
InvestingPro Insights
Recent InvestingPro data offers additional context to Needham's analysis of ViaSat (NASDAQ:VSAT). The company's market capitalization stands at $1.4 billion, with a price-to-book ratio of 0.28 for the last twelve months as of Q1 2025, indicating that the stock may be undervalued relative to its book value. This aligns with one of the InvestingPro Tips, which notes that ViaSat is "Trading at a low Price / Book multiple."
Despite the challenges mentioned in the article, ViaSat has shown strong revenue growth, with a 67.71% increase in the last twelve months as of Q1 2025. However, the company's profitability remains a concern, as highlighted by another InvestingPro Tip stating that ViaSat is "Not profitable over the last twelve months." This is reflected in the negative operating income of -$667.25 million for the same period.
The stock's recent performance has been challenging, with InvestingPro data showing a 33.03% price decline over the last three months. This corresponds with the InvestingPro Tip that the "Stock has taken a big hit over the last six months." Despite these headwinds, analysts remain optimistic, predicting that the company will be profitable this year, according to another InvestingPro Tip.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for ViaSat, providing a deeper understanding of the company's financial health and market position.
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