Aviation, Maritime And Defense Sectors Will Benefit From Satellite Integrations

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AnalystConsensusTarget
Consensus Narrative from 7 Analysts
Published
24 Mar 25
Updated
24 Jul 25
AnalystConsensusTarget's Fair Value
US$18.29
19.7% undervalued intrinsic discount
24 Jul
US$14.69
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1Y
-27.8%
7D
-6.6%

Author's Valuation

US$18.3

19.7% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update01 May 25
Fair value Decreased 3.25%

Key Takeaways

  • Strategic partnerships and satellite integration are set to boost revenue via expanded service offerings and improved customer satisfaction.
  • Focus on debt reduction and capital synergies is poised to alleviate financial pressure and enhance net margins.
  • Revenue growth challenges stem from declines in U.S. broadband and aviation sectors, alongside ARPU pressures and debt issues, risking financial stability.

Catalysts

About Viasat
    Provides broadband and communications products and services in the United States and internationally.
What are the underlying business or industry changes driving this perspective?
  • Strategic partnerships and integration of new satellites are expected to enhance coverage and capacity, which should boost revenue through expanded service offerings and improved customer satisfaction.
  • The expansion in aviation and maritime sectors, with a significant backlog in both, suggests potential growth in revenue and EBITDA as these orders are fulfilled.
  • Initiatives for capital synergies and operating cost efficiencies are projected to improve net margins and increase cash conversion rates over the coming fiscal years.
  • Increased focus on debt reduction through capital allocation priorities and strategic asset sales is expected to alleviate financial pressure and enhance net margins by reducing interest expenses.
  • Continued development in high-value defense technologies and encryption services, driven by strong backlog and award growth, is anticipated to contribute significantly to future revenue and earnings growth.

Viasat Earnings and Revenue Growth

Viasat Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Viasat's revenue will grow by 2.7% annually over the next 3 years.
  • Analysts are not forecasting that Viasat will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Viasat's profit margin will increase from -12.7% to the average US Communications industry of 10.7% in 3 years.
  • If Viasat's profit margin were to converge on the industry average, you could expect earnings to reach $526.2 million (and earnings per share of $3.81) by about July 2028, up from $-575.0 million today.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 6.7x on those 2028 earnings, up from -3.3x today. This future PE is lower than the current PE for the US Communications industry at 28.4x.
  • Analysts expect the number of shares outstanding to grow by 1.99% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 11.6%, as per the Simply Wall St company report.

Viasat Future Earnings Per Share Growth

Viasat Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Viasat faces pressure in its U.S. fixed broadband business, which is experiencing revenue declines, potentially impacting overall revenue growth.
  • There are incremental average revenue per user (ARPU) pressures in the maritime segment, particularly with legacy services, which could negatively affect profit margins in the short term.
  • The company's existing debt level is acknowledged as needing to be significantly lower, and while there are efforts to deleverage, the current leverage could burden net income and investor returns.
  • The completion and entry into service of the ViaSat-3 flights have been subject to delays and rescheduling, affecting the timeline for new revenue streams and potentially impacting financial stability if further delays occur.
  • Ongoing challenges in aircraft OEM deliveries are impacting the rate at which aviation connectivity revenues are realized, potentially impacting Viasat’s revenue and earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of $18.286 for Viasat based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $52.0, and the most bearish reporting a price target of just $10.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.9 billion, earnings will come to $526.2 million, and it would be trading on a PE ratio of 6.7x, assuming you use a discount rate of 11.6%.
  • Given the current share price of $14.6, the analyst price target of $18.29 is 20.2% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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