Globalstar (NYSE:GSAT) is 5.2% higher Monday after Craig-Hallum started coverage at Buy, saying the stock is headed for an inflection point after building its spectrum toward a key partnership with Apple.
The company “spent the better half of the last decade developing spectrum assets (primarily Band 53) and remains substantially under-credited for these efforts,” analyst George Sutton says, noting that kind of airwaves development takes longer than one would think.
He quotes Abraham Lincoln – “If I had eight hours to chop down a tree, I’d spend six hours sharpening my axe” – and adds “GSAT is no longer sharpening its axe. It’s ready to monetize.”
That comes after Apple confirmed with its iPhone 14 launch it would tap Band 53 to offer emergency satellite service.
The “sweeter deal” comes for GSAT’s long-term shareholders, though, Sutton notes: Apple will cover the bill for 95% of some $327M in capital expenditures to launch 17 new satellites in 2025, suggesting it’s unlikely that Apple will end the relationship after that big a commitment.
And that means potential further services down the line. Globalstar has “significant unrealized potential” in its Commercial Internet of Things segment, and its S-Band spectrum has evolved to a point where it’s attractive to potential customers looking for private LTE solutions, he says.
He’s started the stock at Buy with a $5 price target on a sum-of-the-parts approach, implying 134% upside ahead for Globalstar.