Satellite And Spectrum Expansion Will Drive Opportunity Amid Potential Sale

Key Takeaways

• Expansion of government partnerships and spectrum monetization diversifies revenue streams and strengthens long-term financial stability.
  
• Upgrades in satellite infrastructure and adoption of new IoT modules drive network growth, subscriber increases, and higher margins.
  
• Long sales cycles, high capital needs, strong competition, regulatory hurdles, and dependency on major deals risk revenue growth, margins, and financial stability.

Catalysts

Provides mobile satellite services in the United States, Canada, Europe, Central and South America, and internationally.

• Continued expansion of government and defense partnerships, including new agreements with U.S. federal agencies and the Parsons relationship, is expected to drive higher recurring revenue as demand for resilient, mission-critical satellite connectivity grows in response to infrastructure vulnerabilities and natural disasters, supporting both top-line growth and improved visibility.
  
• The global rollout of the RM200 2-way module with over 50 partners in advanced testing signals accelerating adoption across industrial, defense, and commercial IoT markets as more assets require always-on connectivity, increasing subscriber numbers and raising ARPU, ultimately benefiting future revenue and margin expansion.
  
• Ongoing upgrades to ground infrastructure and the deployment of next-generation satellites (C-3 system and new launches with SpaceX) will boost network capacity, reach, and performance, enabling Globalstar to meet rising demand for hybrid and direct-to-device solutions, thus supporting long-term service revenue and higher discretionary earnings.
  
• Progress in monetizing proprietary spectrum assets (notably Band 53/n53), including new licensing and international expansion, facilitates new revenue streams from terrestrial and hybrid wireless markets-a diversification that enhances revenue stability and long-term earnings power.
  
• Advancements in software-defined radio (XCOM RAN) and Network-as-a-Service models create new opportunities to capture enterprise and horizontal markets (beyond initial customers), capitalizing on the convergence of satellite and terrestrial networks to drive incremental service and licensing revenues with improved gross margins.

Globalstar Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Globalstar's revenue will grow by 13.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from -18.8% today to 19.6% in 3 years time.
• Analysts expect earnings to reach $75.2 million (and earnings per share of $0.38) by about September 2028, up from $-49.0 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 108.8x on those 2028 earnings, up from -78.2x today. This future PE is greater than the current PE for the US Telecom industry at 15.4x.
• Analysts expect the number of shares outstanding to grow by 0.41% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Globalstar Future Earnings Per Share Growth

Risks

• The company faces long sales cycles and customer delays in both the enterprise terrestrial and government verticals, which may limit predictable revenue growth and introduce volatility in achieving revenue targets in the medium to long term, potentially impacting net earnings.
  
• Persistent high capital expenditure requirements for satellite replenishment, ground infrastructure build-out (such as adding 90 antennas across 35 ground stations), and technology development (e.g., XCOM RAN) could outpace internal cash generation and place pressure on free cash flow, increasing risk of dilution or higher-cost debt, which could suppress net margins.
  
• Competitive threats from alternative connectivity options-including continued advances in terrestrial 5G and 6G networks, and well-funded LEO satellite rivals (like Starlink and Kuiper)-could erode Globalstar's pricing power and customer base, pressuring both revenue and ARPU in the long run.
  
• Regulatory complexities, especially regarding spectrum sharing, dual licensing, and international terrestrial license approvals, may introduce delays, additional costs, or constrain market access; this raises operational risk and could significantly impact long-term revenue and profitability.
  
• The company's ability to expand through strategic partnerships (such as with Parsons or defense agencies) hinges on initial customer success and adoption, but over-reliance on a small number of key contracts or verticals creates earnings volatility and could hurt net margins if major customer deals are delayed, downsized, or lost.

Valuation

• The analysts have a consensus price target of $52.5 for Globalstar 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 $60.0, and the most bearish reporting a price target of just $45.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $383.1 million, earnings will come to $75.2 million, and it would be trading on a PE ratio of 108.8x, assuming you use a discount rate of 6.8%.
• Given the current share price of $30.25, the analyst price target of $52.5 is 42.4% 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.