Telesat (TSAT) Moves 7.5% Higher: Will This Strength Last?

Telesat (TSAT) shares rose 7.5% to $29.85 on high volume, extending a four-week gain to 27.7%, fueled by increasing demand for global connectivity and progress in its LEO and GEO satellite businesses, notably the Lightspeed program which has over C$1 billion in committed backlog. The company reiterated its 2025 guidance, projecting revenues of C$405M-C$425M and adjusted EBITDA of C$170M-C$190M, with C$900M-C$1.1B in CapEx largely for Lightspeed. However, the stock's near-term outlook is tempered by expectations of a $0.94 per share quarterly loss and a 31.1% revenue decline, with unchanged consensus EPS estimates over the past 30 days, suggesting potential challenges to sustaining the recent rally.

Analysis

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ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. If you wish to go to ZacksTrade, click OK. If you do not, click Cancel. Telesat (TSAT) Moves 7.5% Higher: Will This Strength Last? Read MoreHide Full Article Telesat (TSAT - Free Report) shares soared 7.5% in the last trading session to close at $29.85. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 27.7% gain over the past four weeks. The increase in share price can be attributed to the buzz surrounding satellite and communication stocks as demand for global connectivity soars. The favorable growth backdrop offers Telesat a long growth runway for its next-generation technology. The company continues to execute well across both its LEO and GEO satellite businesses. Momentum in the LEO business is centered on the Telesat Lightspeed program, which is witnessing increasing traction among key sectors like aero and government users. On the last earnings call, TSAT noted that the commercial pipeline was robust, with opportunities at different stages of development, and the committed backlog for Lightspeed exceeded C$1 billion at the end of the second quarter. It is making progress on satellite development, ground infrastructure, and network software. Recently, it partnered with Calian to develop the operational data platform for the Telesat Lightspeed LEO network. Telesat reiterated its 2025 guidance. The company expects revenues between C$405 million and C$425 million, while adjusted EBITDA is expected to be in the range of C$170 million to $190 million. Total capital expenditures are projected to be between C$900 million and C$1.1 billion, largely related to Lightspeed. This satellite communications company is expected to post quarterly loss of $0.94 per share in its upcoming report, which represents a year-over-year change of -1075%. Revenues are expected to be $69.96 million, down 31.1% from the year-ago quarter. Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements. For Telesat, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on TSAT going forward to see if this recent jump can turn into more strength down the road. Telesat is a member of the Zacks Satellite and Communication industry. One other stock in the same industry, EchoStar (SATS - Free Report) , finished the last trading session 2.4% lower at $77.12. SATS has returned 17.5% over the past month. EchoStar's consensus EPS estimate for the upcoming report has changed +3.1% over the past month to -$1.23. Compared to the company's year-ago EPS, this represents a change of -136.5%. EchoStar currently boasts a Zacks Rank of 3 (Hold). See More Zacks Research for These Tickers Normally $25 each - click below to receive one report FREE: Image: Bigstock Telesat (TSAT) Moves 7.5% Higher: Will This Strength Last? Telesat (TSAT - Free Report) shares soared 7.5% in the last trading session to close at $29.85. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 27.7% gain over the past four weeks. The increase in share price can be attributed to the buzz surrounding satellite and communication stocks as demand for global connectivity soars. The favorable growth backdrop offers Telesat a long growth runway for its next-generation technology. The company continues to execute well across both its LEO and GEO satellite businesses. Momentum in the LEO business is centered on the Telesat Lightspeed program, which is witnessing increasing traction among key sectors like aero and government users. On the last earnings call, TSAT noted that the commercial pipeline was robust, with opportunities at different stages of development, and the committed backlog for Lightspeed exceeded C$1 billion at the end of the second quarter. It is making progress on satellite development, ground infrastructure, and network software. Recently, it partnered with Calian to develop the operational data platform for the Telesat Lightspeed LEO network. Telesat reiterated its 2025 guidance. The company expects revenues between C$405 million and C$425 million, while adjusted EBITDA is expected to be in the range of C$170 million to $190 million. Total capital expenditures are projected to be between C$900 million and C$1.1 billion, largely related to Lightspeed. This satellite communications company is expected to post quarterly loss of $0.94 per share in its upcoming report, which represents a year-over-year change of -1075%. Revenues are expected to be $69.96 million, down 31.1% from the year-ago quarter. Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements. For Telesat, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on TSAT going forward to see if this recent jump can turn into more strength down the road. The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank 1 (Strong Buy) stocks here >>>> Telesat is a member of the Zacks Satellite and Communication industry. One other stock in the same industry, EchoStar (SATS - Free Report) , finished the last trading session 2.4% lower at $77.12. SATS has returned 17.5% over the past month. EchoStar's consensus EPS estimate for the upcoming report has changed +3.1% over the past month to -$1.23. Compared to the company's year-ago EPS, this represents a change of -136.5%. EchoStar currently boasts a Zacks Rank of 3 (Hold). Telesat (TSAT) has experienced significant stock price appreciation, rising 7.5% in the last session and 27.7% over the past four weeks, driven by high trading volume and broad investor interest in the satellite communications sector. This momentum is underpinned by the long-term potential of its Telesat Lightspeed LEO program, which has secured a committed backlog exceeding C$1 billion and is showing increasing traction with aero and government clients. The company has reiterated its 2025 guidance, projecting revenues between C$405 million and C$425 million with adjusted EBITDA of C$170 million to $190 million. However, this long-term optimism is sharply contrasted by severe near-term financial headwinds. The upcoming quarterly report is expected to show a 31.1% year-over-year revenue decline to $69.96 million and a substantial loss of $0.94 per share. Critically, consensus EPS estimates have remained unchanged for the past 30 days, creating a notable disconnect between the stock's rally and its underlying earnings trend, a factor that empirically challenges the sustainability of price momentum. The ambitious Lightspeed project also necessitates massive capital expenditures, projected at C$900 million to C$1.1 billion for 2025, underscoring the high-risk, capital-intensive nature of this growth story.

Key Decisions for Investors

• Investors must weigh the long-term growth narrative of the Lightspeed program, supported by a C$1 billion backlog, against the significant near-term financial deterioration, including an expected 31.1% revenue decline and a widening quarterly loss.
• The significant disconnect between the stock's 27.7% four-week rally and the stagnant consensus earnings estimates presents a major caution; the absence of positive estimate revisions suggests the recent price strength may be fragile.
• Monitor the upcoming earnings report for any changes in the Lightspeed execution timeline and cost, as the C$900M-C$1.1B capital expenditure plan for 2025 represents a substantial cash burn that could pressure the balance sheet.
• Given the mixed signals, consider the stock's Zacks Rank #3 (Hold) as an indication to await more concrete fundamental improvements or positive earnings revisions before increasing exposure.