ViaSat's Potential Is Already Reflected In Its Valuation, Barclays Says In Downgrade

The satellite industry is going through a major shift amid the arrival of new-generation satellites, which bodes well for growth for the next five years, although pricing pressure and market share shifts could be material, according to Barclays.

The Analyst

Analyst Mathieu Robilliard downgraded shares of ViaSat, Inc. VSAT, a relatively new player in the industry, from Equal Weight to Underweight and lowered the price target from $75 to $60, suggesting 12-percent downside.

The Thesis

ViaSat shares have materially outperformed peers over the past year, Robilliard said in a Thursday morning note. The Carlsbad, California-based company has substantial growth opportunity ahead, given its recent launch of ViaSat 2 and the planned launch of ViaSat 3 in 2019, the analyst said — creating the potential for incremental capacity.

That said, Robilliard said ViaSat's share price already reflects "higher and overly optimistic growth assumptions."

Barclays' estimates for the company's satellite division in the residential broadband and in-flight connectivity markets would require "faultless" execution in competitive markets, the analyst said. 

Barclays' estimates, as well as the consensus revenue and EBITDA estimates for 2020, have gone down by 13 percent and 14 percent, respectively, over one year, primarily due to delayed ViaSat 2 launch, Robilliard said. 

The satellite industry is plagued by oversupply, which could lead to consolidation, according to Baclays. 

The Price Action

ViaSat shares were down 2.6 percent at the time of publication Thursday. 

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Photo courtesy of ViaSat.