EchoStar deal highlights spectrum owned by ViaSat, says William Blair

William Blair analyst Louie DiPalma highlights ViaSat's "elite" spectrum holdings following EchoStar's sale to AT&T, anticipating investors will increasingly adopt a sum-of-the-parts valuation for VSAT. The firm estimates ViaSat's international spectrum could be worth over $2 billion, potentially leading to future deals. DiPalma maintains an Outperform rating on ViaSat, projecting over 30% upside for the stock despite its recent rally.

Analysis

A recent spectrum sale by EchoStar (SATS) to AT&T (T) is serving as a catalyst for a re-evaluation of ViaSat's (VSAT) valuation, according to William Blair analyst Louie DiPalma. The analyst posits that this transaction will encourage investors to adopt a sum-of-the-parts (SOTP) approach to ViaSat, explicitly accounting for its "elite" and excess spectrum holdings alongside its core defense and advanced technologies business. William Blair estimates that ViaSat’s international spectrum assets alone could be worth more than $2 billion and anticipates the company will pursue monetization through future spectrum deals. Despite a recent stock rally, the analyst maintains an Outperform rating on VSAT, projecting potential upside of over 30% based on this latent value.

Key Decisions for Investors

• Investors should consider valuing ViaSat using a sum-of-the-parts model to capture the potential value of its international spectrum, which one firm estimates could exceed $2 billion.
• Monitor for announcements regarding international spectrum deals, as such events would serve as a key catalyst for validating the analyst's thesis and unlocking shareholder value.
• Given the Outperform rating and a projected 30% upside, investors could assess if the stock's risk/reward profile aligns with their strategy, noting that this potential is identified even after a recent price increase.