It is with a degree of observation, not entirely unmixed with amusement, that one notes the recent advancement in the price of shares belonging to Viasat [VSAT +4.12%]. A most considerable increase, prompted, it appears, by a revised estimation from Mr. Landon Park of Morgan Stanley. A gentleman who, having previously assigned a modest value to the stock, now anticipates a rise to fifty-one dollars per share – a calculation which, whilst undeniably optimistic, has proven sufficient to stir the market.
By the close of trading, the stock had gained a respectable four and one-tenth percent, a circumstance which suggests a certain eagerness amongst investors, or perhaps merely a lack of more pressing engagements for their capital.
The Analyst’s Assessment
Mr. Park, it would seem, has undergone a most remarkable change of heart. Formerly valuing the shares at twelve dollars apiece – a sum which, one gathers, was significantly below their prevailing market price of forty-four dollars – he now foresees a further ten percent increase within the coming year. This sudden alteration in opinion is attributed to both a hopeful outlook for the “Direct-to-Device” market and a shift in the method of valuation.
The latter is particularly noteworthy. Mr. Park now proposes to assess Viasat not as a unified enterprise, but as a collection of parts, anticipating, perhaps, a future division of the company. Such a strategy is not uncommon, and may prove advantageous, though it relies upon a degree of speculation which some may find unsettling. Indeed, one cannot help but observe a parallel with the recent actions of L3Harris, who have elected to separate their rocket engine businesses – a move which appears to have inspired similar thoughts within the Viasat management.
A Question of Prudence
This approach, whilst ingenious, does raise certain questions regarding the underlying strength of the company. To justify such a soaring price – an increase of nearly four hundred percent over the past year, despite a continued absence of profit – requires a considerable degree of faith in future prospects. One cannot ignore the fact that Viasat currently holds a market capitalization of six billion dollars, offset by net debts of five and eight-tenths billion – a circumstance which, whilst not uncommon in these speculative times, demands careful consideration.
With trailing free cash flow of one hundred and forty-six million dollars, the price-to-free cash flow ratio stands at forty-one times, and the enterprise value-to-free cash flow ratio is nearly double that. Spin-offs and spectrum sales may indeed provide the necessary justification, but one is left with the impression that the valuation remains, at best, stretched.
Therefore, whilst acknowledging the current enthusiasm, one feels compelled to maintain a cautious stance. For the time being, a sale of Viasat stock appears, to this observer, the more prudent course.
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2026-01-17 00:24