Globalstar, Inc.: 5G Penny Stock Up 385% Year-to-Date & Still Has 100% Upside

Globalstar Stock Finally Catching the Attention of Wall Street

After an uneventful 2020, Globalstar, Inc. (NASDAQ:GSAT), a provider of mobile satellite services, finally has something to cheer about. Globalstar stock has been on fire in 2021, though it’s still a little volatile.

As of this writing, GSAT stock is up by 385% year-to-date and 430% year-over-year.

Despite the meteoric gains, Wall Street thinks Globalstar stock is just getting started. GSAT stock actually jumped by 47% between June 21 and 23 after it received a “Buy” rating from a Wall Street analyst with a price target of $3.25 per share, which implies 100% upside from its current level.

Not everyone is on board with Globalstar, Inc., though. On the same day, an analyst at Morgan Stanley (NYSE:MS) reiterated his “Sell” rating, with a 12-month share-price forecast of $0.55.

Despite the massive disparity in forecasts, there are more reasons to be bullish than to be bearish on Globalstar stock.

The company reported solid first-quarter results, with its service and equipment revenue above pre-pandemic levels. Globalstar has been growing its commercial Internet of Things (IoT) segment, and it’s looking to expand outside of the traditional satellite device and service sector.

On top of that, Globalstar, Inc. has announced a number of agreements and partnerships, most notably with Nokia Oyj (NYSE:NOK), Ceres Tag, XCOM Labs, Jeep Jamboree USA, and Cisa Trading.

Chart courtesy of StockCharts.com

GSAT Stock Overview

Globalstar is a leading global provider of mobile satellite and IoT connectivity services and terrestrial spectrum. (Source: “Burkenroad Reports,” Globalstar, Inc., April 23, 2021.)

The company provides wireless communications services in areas not served (or under-served) by terrestrial wireless and wireline networks and where terrestrial networks aren’t operational due to natural or man-made disasters.

Globalstar, Inc. offers voice and data communication services over its network of in-orbit satellites and its active ground stations (gateways), which it refers to collectively as the “Globalstar System.”

The company’s services are available only with equipment designed to work on its network two-way voice communication and data transmissions using mobile or fixed devices, and one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station.

It currently has 745,000 subscribers.

Some of Globalstar, Inc.’s diverse customers and partners are the U.S. Department of Homeland Security, the U.S Army, the U.S. Air Force, the National Oceanic and Atmospheric Administration, BP plc (NYSE:BP), and Royal Dutch Shell plc (NYSE:RDS.A).

Because of the company’s diverse customer base, no single customer contributes more than 10% of its revenue.  

Solid Start to 2021

For its first quarter ended March 31, 2021, Globalstar announced that its total revenue slipped by 16% year-over-year to $26.9 million.

The company noted that the decline was primarily due to the timing of its engineering service revenue. Lower service revenue was offset partially by an increase in revenue generated from subscriber equipment sales. (Source: “Globalstar Announces First Quarter 2021 Results,” Globalstar, Inc., May 6, 2021.)

The company’s first-quarter 2021 net loss improved by $1.9 million, to a loss of $36.3 million ($0.02 loss per share), compared to a first-quarter 2020 net loss of $38.2 million ($0.02 loss per share).

Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $5.9 million, compared to $11.0 million in the same prior-year period.

Globalstar, Inc. ended the first quarter of 2021 with cash and cash equivalents of $8.4 million and with restricted cash of $98.4 million.

Jay Monroe, executive chairman, commented, “…the terrestrial spectrum effort is progressing well and…we are entering the period during which we can move to fulsome monetization.” (Source: Ibid.)

He continued, “During the quarter we had multiple transformative announcements including Qualcomm’s inclusion of band 53 in their upcoming modem and Nokia’s announcement of the deployment at the Port of Seattle, proving the ability for Band 53 to compete well where other licensed, semi-licensed and unlicensed alternatives are present.”

Analyst Take

Globalstar, Inc. is an overlooked 5G stock that’s starting to grab the attention of Wall Street. After years of heavy lifting, the company is about to start realizing a return on its satellite and spectrum assets.

That doesn’t mean the company has been suffering up to this point. It has a strong balance sheet and a growing, diverse core business.

Over the last number of years, Globalstar’s revenues have been expanding at a compound annual growth rate (CAGR) of seven percent and its adjusted EBITDA have been expanding at a 10% CAGR.