UPDATE: Raymond James Downgrades ViaSat (VSAT) to Outperform
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Raymond James analyst Richard Prentiss downgraded ViaSat (NASDAQ: VSAT) from Strong Buy to Outperform with a price target of $62.00 (from $70.00).
The analyst comments "We are downgrading Viasat from Strong Buy to Outperform rating and lowering target price from $70 to $62 after reporting in-line 2QFY22 Adj. EBITDA and announcing a deal to buy private satellite services company Inmarsat for $7.3B. VSAT dropped ~17% yesterday as the Inmarsat deal appears expensive (~10x 2021E EV/EBITDA based on Friday’s closing price, and still ~9.2x based on Monday’s closing price) and pushes peak leverage to 5.0x in CY22. For historical reference, EchoStar made a failed offer to buy Inmarsat back in 2018 (before it went private) for ~8x 2018E EV/EBITDA (see our note HERE) and interestingly expected Adj. EBITDA at Inmarsat has not changed much since then (2018E and 2020E ~$734M) to now (2021E $743M). The current deal is expected to close in 9-18 months, with a target of 2H22 (RJE YE22) and includes assuming $3.4B in net debt ($3.8B in gross debt) and paying Inmarsat shareholders $850M in cash and issuing 46.36M new shares of VSAT (~37.5% of new VSAT)."
Shares of ViaSat closed at $63.05 yesterday.
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