This Starlink Rival is Breaking Out, But Should You Buy the Stock?

Deutsche Bank this morning upgraded Viasat (VSAT) from “Hold” to “Buy,” triggering a 13.3% surge in VSAT stock to start the week. The brokerage firm’s upgrade was accompanied by an increased price target of $15.00, freshly raised from $13.00, which implies expected upside of more than 53% to last Friday’s closing price.

What’s Behind Today’s VSAT Upgrade?

In a note to clients, analyst Edison Yu wrote that “we see the risk/reward profile at current levels being increasingly compelling,” particularly considering Viasat’s plans for strategic asset sales. The analyst believes VSAT’s potential monetization opportunities, specifically its L-band spectrum and DAT hardware business, present compelling pathways for balance sheet deleveraging and enhanced financial flexibility.

Overall, VSAT is rated a tepid “Hold” by analysts, with 9 brokerage firms currently tracking the satellite stock. The average price target is $18.86.

Viasat Competes With Elon Musk’s Starlink

Along with legacy telecom players like AT&T (T) and Verizon (VZ), Viasat also competes with rivals like Globalstar (GSAT) and Iridium (IRDM), as well as Elon Musk’s Starlink, a subsidiary of privately held SpaceX. Specifically, Viasat’s ambitious space strategy includes the deployment of two major satellites, marking a significant expansion of its operational capabilities in the space communications sector. 

Going forward, the combination of asset monetization opportunities, satellite deployment plans, and focus on debt reduction positions could position Viasat favorably for long-term growth, even as the company faces substantial competitive pressure from heavyweights like Starlink in the communications services market.

Is Now a Good Time to Buy VSAT Stock?

In the short term, however, it looks like a risky time to jump into VSAT stock. The shares have broken out above their upper Bollinger Band at $10.71, which has preceded short-term pullbacks, and the 200-day moving average is overhead at $12.03.

Additionally, at 66.22, the 14-day Relative Strength Index (RSI) for VSAT is verging on overbought territory. 

On balance, this suggests that the breakout in Viasat stock could be overdone, and investors looking for an entry point for a longer-term position may want to wait for a pullback from the recent highs before adding shares.