VSAT - Viasat: Integration Synergies Starting To Deliver

2024-04-08 13:22:25 ET

Summary

• Viasat's stock has underperformed due to satellite malfunctions, causing setbacks to its broadband ambitions.
• On the other hand, the integration with Inmarsat is going in full swing, increasing revenues in the fiscal year 2024 while cost synergies should improve profitability during the next fiscal year.
• Viasat faces competition from Starlink and others but has a sizeable backlog and is expanding its IFC or in-flight communications business.
• This is an undervalued stock and the management is driving the synergies to achieve positive free cash flow.
• Therefore, it deserves better but there are risks when investing in space-based communications.

When I last covered Viasat Inc. (VSAT) in April last year, regulators in the UK had just cleared its acquisition of London-based Inmarsat for $7.3 billion. In line with my bullish outlook, the stock did rise from $34 to reach $47.2 in early June as shown in the chart below but subsequently suffered from a long slide and now trades at around $16.7....

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