VSAT - EchoStar: High Debt But Space-Based And Merger Opportunities

2024-04-15 05:33:14 ET

Summary

• EchoStar is improving its positioning in the satellite industry, particularly in internet broadband, following the launch of Jupiter 3 to better compete with Viasat and SpaceX.
• The company has opportunities to serve enterprise customers directly, such as providing in-flight connectivity to Delta Air Lines.
• Inheriting DISH Network's debt-laden balance sheet has weighed down on the stock, and with the Federal Reserve favoring a higher-for-longer rates strategy, things are risky.
• On the other hand, the merger with DISH does create opportunities for synergistic growth.
• I also demystify the notion that SpaceX with its Starlink subsidiary could be monopolizing the IFC market.

While Viasat (NASDAQ: VSAT ) faced problems with its antenna in July last year, EchoStar ( SATS ) managed to successfully launch and deploy its Jupiter 3 satellite, signifying opportunities for windfall gains in space-based broadband communications. However, the upside to $23.7 enjoyed in August by the $3.92 billion dollar company was short-lived as shown in the chart below, and after several volatile episodes, it is now trading at around $14.2....

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