Viasat shares are up 335% YTD. Why analysts see growth potential

Raymond James analyst Brent Pender recommended buying shares of Viasat, one of the largest players in the satellite communications market, which competes with Starlink from Elon Musk's SpaceX. Viasat stock is up 335% this year, but Pender expects another 40% up - after strong quarterly reporting and an increase in defense orders. The main drivers could be the launch of Viasat-3 series orbital satellites and the high potential of the company's defense division.

Analyst of investment company Raymond James Brent Pender improved the rating of shares of satellite operator Viasat from "hold" to "buy" and set a new target price of $52 per paper, reports Barron's. This target implies the potential growth of quotations by almost 41% relative to the closing level on November 10. Since the beginning of the year, the market value of Viasat increased by 335%, at the premarket on Tuesday, November 11, the shares added 4%.

"We believe that despite the strong share price appreciation over the past six months and the challenging prior years following our November 2022 downgrade, the company has significant upside potential on a sum-of-the-parts model and through a number of catalysts," Pender said .

Raymond James upgraded the rating days after Viasat released its quarterly earnings report in which it reported revenue growth of 2% year-over-year, from $1.12 billion to $1.14 billion, just below the Wall Street consensus estimate, Zack's analysts said . Meanwhile, the company's net loss narrowed to $61.4 million, or $0.45 per share, compared with a loss of $137.6 million, or $1.07 per share, in the same period last year. Operating income reached $35.8 million compared to a loss of $24.7 million a year earlier. EBITDA profit increased to $385 mln from $375 mln.

Viasat's latest report shows real progress, Simply Wall St writes, but high capital expenditures and project delays remain a major near-term risk, especially to cash flow and profitability. The main driver for the coming months, according to the publication's analysts, is the successful launch and activation of the Viasat-3 series of satellites, which should provide the company with increased coverage, revenue growth and margin improvement, as well as confirm its ability to achieve its long-term goals.

However, Simply Wall St reminds that high infrastructure costs could continue to put pressure on the company's financials. The publication calculates the fair value of Viasat's stock at $26.14, which is 27% below the current price.

Most Wall Street analysts are leaning toward Viasat's stock still having room to grow, though a portion of the market is cautious. According to MarketWatch, four analysts tracking the company's stock suggest buying it, three suggest holding and one suggests selling.

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