On Thursday, BofA Securities increased its price target on ViaSat (NASDAQ:VSAT) shares from $24.00 to $28.00 while maintaining a Buy rating.
The adjustment follows ViaSat's fourth-quarter results and guidance for 2025, which indicated approximately flat year-over-year revenue growth and low to mid-single digit EBITDA growth, adjusted for litigation.
The company's guidance fell short of expectations, primarily due to challenges in the US fixed broadband business and the delayed service entry of the VS3-F2 and F3 satellites. These satellites are now anticipated to contribute to growth starting in 2026.
ViaSat's performance has been impacted by the strategic decision to prioritize capacity, affecting its fixed broadband business in the United States.
Additionally, the updated schedules for the launch and service initiation of the VS3-F2 and F3 satellites are expected to delay revenue growth until 2026.
Despite this, BofA Securities has revised its estimates based on the new guidance and rolled forward its price objective to fiscal year 2025 estimates, which remain undiscounted.
The revised price target reflects a decrease in adjusted EBITDA estimates by approximately 3-5% on average for the years 2025-2027.
Nonetheless, BofA Securities has reiterated its Buy rating on ViaSat shares. The firm's positive stance is influenced by the current valuation of ViaSat, which stands at 5 times enterprise value/EBITDA.
BofA Securities finds this valuation attractive, given its expectations for strong EBITDA growth in the period from 2025 to 2027.
ViaSat, a global communications company, is navigating through a transitional phase as it prepares for the launch of its next-generation satellites.
The firm's current valuation and the anticipated growth trajectory post-2026 have been significant factors in BofA Securities' analysis and the consequent price target upgrade.
InvestingPro Insights
As ViaSat (NASDAQ:VSAT) navigates through its transitional phase with an eye on future satellite launches, real-time data from InvestingPro provides a deeper insight into the company's financial health and market performance. ViaSat's market capitalization stands at $1.98 billion, reflecting the scale of the company within the communications sector. Despite facing headwinds, ViaSat's revenue showed a remarkable increase, with a growth of 67.59% over the last twelve months as of Q4 2024, indicating substantial expansion in its operations.
InvestingPro Tips highlight that ViaSat is currently trading at a low Price/Book multiple of 0.39, which may appeal to value investors searching for assets trading below their intrinsic value. Additionally, while the company has been burning through cash, its liquid assets still exceed short-term obligations, suggesting a degree of short-term financial stability. Analysts on InvestingPro predict that the company will be profitable this year, providing a potential upside for investors considering the stock's recent performance, which includes a significant return over the last week of 7.56%.
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