GSAT - Globalstar pops as Morgan Stanley upgrades says financing overhang 'removed'

2023-05-03 08:01:07 ET

Globalstar ( NYSE: GSAT ) shares rose more than 6% in pre-market trading on Wednesday as Morgan Stanley upgraded the satellite telecommunications company after last month's $200M convertible financing removed an "overhang" for the company.

Analyst Simon Flannery raised his rating on Globalstar ( GSAT ) shares to equal-weight from underweight but lowered the price target to $0.97 from $1.75, noting the attention should be elsewhere now that financing needs have been met.

"Moving forward, investors should be focused on the company's ability to start monetizing its terrestrial spectrum along with progress towards new satellite launches in 2025," Flannery wrote in an investor note.

Flannery added the company is likely focused on a private 5G network to monetize the spectrum and while the opportunity is slower than some companies, including Verizon ( VZ ) had liked, the company's recent deal with Qualcomm ( QCOM ) to put Band 53 into the chipmaker's RF ecosystem and sales network is a positive.

Following last month's approval from Spain to provide "complementary terrestrial service" for its LTE and 5G networks, the first new approval since November 2020, Flannery said that could "help pave the way" for additional approval approvals in Europe for Globalstar ( GSAT ).

Flannery also noted that scaling its satellite internet-of-things business and continued progress of building its satellites are likely to be positive drivers, with the satellites expected to be built and launched by 2025, which should help the company's deal with Apple ( NASDAQ: AAPL ).

In 2022, Apple ( AAPL ) launched Emergency SOS on the iPhone 14 using Globalstar's ( GSAT ) satellites and the company is likely to generate at least $80M in revenue from the deal "over the next several years," Flannery added. Late last year, Apple ( AAPL ) expanded the availability of its Emergency SOS feature to several countries in Western Europe.

Analysts are mixed on Globalstar ( GSAT ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates GSAT a SELL .

More on Globalstar and satellite communications

• Globalstar jumps 8% as it shores up balance sheet with new $200M in financing
• Globalstar pops 8% as it discloses $252M loan from Apple for satellite service
• Qualcomm slips even as company announces satellite feature for high-end Androids

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