On Tuesday, ViaSat (NASDAQ:VSAT), a prominent provider of inflight connectivity with a market capitalization of $1.08 billion, maintained its position with American Airlines (NASDAQ:AAL), announcing the airline’s decision to offer complimentary Wi-Fi on aircraft equipped with ViaSat and IntelSat technology. This development is a notable success for ViaSat, which currently has over 3,950 aircraft connected and an additional 1,570 in the backlog. According to InvestingPro data, the company has achieved impressive revenue growth of 19% over the last twelve months, though analysts suggest the stock may be currently undervalued.
William Blair’s analyst Louie DiPalma confirmed a Market Perform rating for ViaSat, emphasizing the importance of continuing the relationship with American Airlines. The airline’s mainline fleet, which includes nearly 1,000 aircraft, predominantly uses ViaSat’s Wi-Fi services. ViaSat has been supplying Wi-Fi for American Airlines since it secured a contract for more than 500 aircraft on the day of the 2016 U.S. elections, taking over from IntelSat. InvestingPro reveals that analysts have set price targets ranging from $10 to $56, with multiple experts recently revising their earnings expectations upward for the upcoming period.
The new A321neo and B737 MAX planes are equipped with ViaSat’s system straight from the production line. Despite the competitive pressure from SpaceX’s Starlink, which has recently secured Wi-Fi deals with several other airlines, ViaSat’s execution seems to have satisfied American Airlines. Starlink’s growing presence in the market is evident with over 3,000 aircraft, including business jets, planning to use its Wi-Fi service.
However, ViaSat’s challenges with its ViaSat-3 satellite constellation have limited its ability to provide Wi-Fi for most of American Airlines’ international fleet. This leaves the door open for American Airlines to potentially partner with SpaceX’s Starlink for its widebody fleet in the future. The announcement from American Airlines underscores its commitment to enhancing passenger experience by expanding Wi-Fi availability, while also showcasing ViaSat’s continued relevance in the inflight connectivity space.
In other recent news, Viasat Inc. has announced a strategic agreement with Telesat to integrate Telesat Lightspeed Low Earth Orbit (LEO) capacity into its network. This move is expected to enhance Viasat’s connectivity services, particularly in the mobility and defense sectors, by providing more reliable broadband solutions. Furthermore, Deutsche Bank analyst Edison Yu upgraded Viasat’s stock rating from Hold to Buy, raising the price target to $15.00. This upgrade reflects the potential for Viasat to improve its financial standing through asset monetization and successful satellite launches. Meanwhile, significant insider selling plans have emerged, as major investors like Ontario Teachers and CPP filed Form 144s to sell substantial shares acquired through a merger with Inmarsat. This has raised concerns about changes in Viasat’s ownership structure. Cantor Fitzgerald maintained a Neutral rating on Viasat, with a price target of $12.00, while noting potential for free cash flow positivity in the future. These developments come as Viasat continues to navigate a competitive industry landscape.
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