GSAT - B. Riley sees heavy upside in Globalstar off latest results mystery customer

• We may be getting closer to figuring out the "mystery" customer that's been driving investor interest in Globalstar ( NYSE: GSAT ), B. Riley says, with debt refinancing kicking into gear - but the firm is reiterating its upside view in general, based on the latest partial results from the satellite name.
• Globalstar put out results Thursday that showed better revenue growth than expected and an in-line loss. That once again beat B. Riley expectations, analyst Mike Crawford wrote - and once again he thinks the primary cause is a mystery potential wholesale satellite capacity customer, which he (and others) suspect is Apple.
• That customer, whoever it is, made up $8.8M of the company's $9.5M in engineering and other service revenue - but with no clues to suggest an impending service ramp.
• Such clues might not matter for long, with Apple set (again) to talk about new iPhones in September, when there may or may not be talk of satellite connectivity. "Or maybe this is all a misdirection and the new customer is not Apple at all but a hyperscaler such as Microsoft or Amazon that sees utility in the two-way connectivity enabled by GSAT’s mobile satellite services constellation," Crawford said.
• In any case, the customer has to be large enough to cover almost all of a $400M-$500M bill to launch a new 17-satellite constellation, guaranteeing Globalstar a "stellar" return on investment, and "Either way, disclosure seems imminent given GSAT’s related debt refinancing process now kicking into gear."
• In the meantime, the biggest pillar of value is the imminent monetization of its 11.5MHz block of terrestrial mid-band spectrum. The firm has a Buy rating and a $3.25 price target, now implying 99% upside.
• Apple talk has driven investor moves into the stock before, notably in September (when traders speculated that experimental frequencies at Globalstar lined up with potential iPhone satellite phone connectivity ) and in October around a hardware event (even though the event was focused on computers rather than iPhones ).

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