You might think of Globalstar (NYSEAMERICAN:GSAT) as a satellite services business, but the company also specializes in commercial IoT, or Internet of things. Thus, GSAT stock offers exposure to more than one high-conviction niche market.
It’s an inexpensive stock, which is a double-edged sword. By that, I mean that there’s volatility risk involved, but also the possibility of considerable gains.
Not very long ago, B. Riley analyst Mike Crawford even set a price target of $3.25 on GSAT stock. At the time, this suggested 152% upside.
So, is it reasonable to say that the stock should reach $3 or higher? One detail from Globalstar’s most recent earnings release offers a possible scenario which could get the share price there very quickly.
GSAT Stock at a Glance
By looking through the price history of GSAT stock, investors can see how $3 is a reasonable target for the bulls.
After all, the stock has a 52-week high of $2.98, which is awfully close to $3. That peak was reached on Feb. 17, 2021.
Bear in mind that as recently as late 2020, GSAT stock was trading at around 30 cents. Then there was a massive price spike in January and February 2021.
Was this precipitated by Reddit users? It’s certainly possible, since meme stock mania took hold during that time.
However, I won’t attempt to prove or disprove that Reddit traders were involved. What we do know for sure is that GSAT stock has leveled off to a more favorable price point.
As of Aug. 17, the share price had settled at $1.34 after a few months of choppy price action. It almost feels as if the stock is looking for a direction.
Also notable is Globalstar’s trailing 12-month earnings per share of -6 cents. That’s very close to break-even, and the bulls should look forward to seeing that number (hopefully) turn positive soon.
Positive Subscriber Behavior
There’s no point in pretending that Globalstar’s second-quarter 2021 results were 100% perfect. Yet, the overall fiscal picture looks quite good.
I’ll start with the negative news first. For the quarter, Globalstar reported a year-over-year decline in service revenues, mainly due to a decrease in Duplex subscribers. (Duplex refers to a type of satellite modem.)
This decline shouldn’t pose a major problem, as the overall fiscal picture is favorable.
Specifically, Globalstar reported that its quarterly SPOT activations were up by 33%, and the churn in this area was down by 40% year-over-year. (SPOT is a satellite-based mapping service.)
Globalstar’s press release described this “positive subscriber behavior” as leading to an end-of-period subscriber increase during the second quarter of 2021, following a period of “elevated subscriber churn” in 2020.
On the financial front, Globalstar decreased its net loss by $3.3 million on a year-over-year basis.
Additionally, the company reported having cash and cash equivalents of $15.7 million and restricted cash of $51 million as of June 30, 2021.
Large Deal Imminent?
All in all, it certainly appears that Globalstar is on solid financial footing and is improving in key areas.
It’s entirely possible to invest in GSAT stock based on that. Yet, let’s not miss an important detail from the company’s press release.
Globalstar CEO David Kagan teased his company’s stakeholders with what could turn out to be a real game changer.
First, Kagan stated, “what will be essential to our ability to meaningfully capitalize on the vast opportunities available to us, particularly in the Commercial IoT space, is identifying, pursuing and closing large deals.”
Fair enough — Globalstar is shifting its business model towards IoT, so a “large deal” would undoubtedly help in this endeavor.
Kagan continued, “One such opportunity in particular is remote monitoring in the alternative energy industry, which has progressed over the last few months with successful field testing.”
Before you get too excited, be advised that this opportunity “isn’t yet secured.” Still, Kagan emphasized that “deployments such as this one” could potentially “provide a more diverse revenue base” for Globalstar.
Could Crawford be right with his $3+ price target for GSAT stock?
It’s certainly possible, as we’ve observed the stock at nearly $3 already in 2021.
Just as importantly, Globalstar’s fiscal standing looks generally solid, and appears to be improving.
And the possibility of an imminent “large deal” offers hope that GSAT stock could rally to $3 and beyond in the near future.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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