Barclays downgrades Viasat as satellite supply surges

Investing.com -- Barclays downgraded Viasat to Underweight from Equal weight amid rising competition and limited growth prospects in its satellite business, while maintaining overweight ratings on AST SpaceMobile and Iridium.

The brokerage raised its price target for Viasat to $23 from $10, below the current trading level of about $29. Barclays said the potential sale of Viasat’s DAT business could unlock value, but there is no certainty of a deal.

For AST, Barclays raised its price target to $60 from $37 amid improved medium-term prospects despite launch delays.

Analysts said AST’s service, which includes text, calls, and broadband, could command higher pricing than competitors, and its limited overlap with mobile broadband could be attractive to telecom partners.

Iridium’s price target was cut to $25 from $31 due to rising competition in satellite phones and IoT. Though the company has a strong cash flow and low leverage, leaving more than 40% upside potential.

Barclays said the satellite industry is entering a period of rapid expansion. High-throughput satellites and falling launch costs have driven billable capacity from 2.5 terabits per second in 2020 to an estimated 160 Tbps by 2025, with a forecast 1,300 Tbps by 2030.

Revenue from satellite data services is expected to grow from $21 billion in 2024 to $89 billion in 2034, a 16% compound annual growth rate.

Barclays warned that legacy operators with higher costs or latency may lose market share as new entrants focus on fast-growing markets like residential broadband and direct-to-device services.

Satellites could capture over 20% of the rural broadband market in the long term, while mobile services are likely to remain complementary to terrestrial networks.

Barclays also highlighted the growing value of satellite spectrum, citing SpaceX’s $17 billion purchase of 50 MHz from Echostar for its services, while noting regulatory obligations can complicate spectrum use.