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DARIEN, Conn. - Investment firm Carronade Capital Management, which holds approximately 2.6% of Viasat Inc. (NASDAQ:VSAT), has called for the satellite communications company to separate its Defense and Advanced Technologies (DAT) business through a spin-off or IPO. According to InvestingPro data, Viasat currently trades at a Price/Book ratio of 0.47, suggesting potential undervaluation, while maintaining strong liquidity with a current ratio of 1.72.
In an open letter released Thursday, Carronade argued that the DAT segment is significantly undervalued within Viasat’s current structure, claiming it could be worth $50 per share on its own – more than three times Viasat’s current stock price. This valuation thesis aligns with analyst targets tracked by InvestingPro, which range from $10 to $52 per share, though the company currently operates with a significant debt burden of $7.5 billion.
The investment firm described DAT as "one of the most attractive pure-play defense-technology platforms" with best-in-class margins and double-digit revenue growth. According to Carronade, DAT grew nearly 17% in the last 12 months with 28% EBITDA margins, while its backlog increased 50% year-over-year. The company’s overall financial health is rated as "GOOD" by InvestingPro, which offers comprehensive analysis through its Pro Research Reports, available for over 1,400 US stocks.
Carronade estimates that separating DAT could drive Viasat’s share price to between $50 and $100, compared to its current trading level of approximately $16. This potential upside appears significant, especially considering the stock’s impressive 61.33% gain over the past six months, as reported by InvestingPro.
The letter highlighted DAT’s involvement in several growth areas including next-generation encryption, drone technology, direct-to-device capabilities, and low Earth orbit systems.
For the remaining Communications Services business, Carronade noted that it has approximately 1,600 additional commercial aircraft to be put into service under existing agreements, representing 39% growth potential. The firm also cited the recent milestone of Viasat’s NexusWave maritime service exceeding 1,000 vessel orders.
Carronade believes a separation would allow both businesses to pursue focused growth strategies while improving investor visibility. The firm urged Viasat’s board to prioritize a DAT spin-off as the key outcome of the company’s ongoing strategic review.
The analysis was presented as part of Carronade’s effort to influence Viasat’s strategic direction, according to the press release statement.
In other recent news, Viasat Inc. reported its fourth-quarter fiscal year 2025 results, exceeding revenue forecasts with $1.15 billion compared to the projected $1.13 billion. The company’s earnings per share also outperformed expectations, posting a loss of $0.02 against an anticipated loss of $0.59. Needham analysts revised their outlook on Viasat, lowering the price target to $16 from $19 while maintaining a Buy rating. Additionally, Viasat announced a settlement agreement with Ligado Networks, expecting to receive $568 million in fiscal year 2026, which will be utilized to address near-term debt maturities.
Furthermore, activist investor Carronade Capital Management is advocating for Viasat to separate its broadband and defense units, suggesting this could unlock up to $11 billion in value. Viasat also made significant changes to its corporate governance, revising stockholder agreements and experiencing a director’s resignation. The company reported growth in its Government Satellite Communications and Digital Airware Technologies sectors, with respective year-over-year increases of 16% and 11%, though these were partly offset by a 9% decline in the Commercial Communications sector.
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