Globalstar, Inc. (NYSEMKT:GSAT) Higher on Global Ambitions


Globalstar, Inc. (NYSEMKT:GSAT) is bolting higher after announcing a major new contract with GE Wind Energy at the end of November, Globalstar, Inc. (NYSEMKT:GSAT) and is starting to attract new attention from investors. Current trading activity is nearly 6X higher than average.

The company provides mobile satellite services, including voice and data communication services, through a global satellite network.

Globalstar, Inc. (NYSEMKT:GSAT) shares are currently trading at $1.40, giving the company a total stock market cap of $1.7 billion. Over the most recent 52-week period, shares of the company have traded as low as $0.63 and as high as $3.00. Shares of GSAT are currently trading in a range of $1.13 to $1.45. Investment managers and strategic entities own nearly 82 percent of GSAT shares.

On YTD basis (through the end of trading on December 16th), shares of GSAT are down 26.92 percent in 2016. However, there have been encouraging signs that shares of the company are ready to start heading higher. During the week of December 16, shares of the company started to show some upward momentum.

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The company provides wireless communication services in areas that are not served or underserved by terrestrial wireless and wireline networks, and in circumstances where terrestrial networks do not operate due to natural or man-made disasters.

That’s what makes the company’s new deal with GE Wind Energy so interesting. Announced on November 30 by Globalstar Europe Satellite Services Ltd, a fully owned subsidiary of Globalstar, the deal will involve deployment of the company’s SPOT Gen3 safety devices by GE Wind Energy, a major international wind technology provider. The SPOT devices will be used to track and protect GE Wind Energy workers as they deploy, operate and maintain onshore wind power installations in Europe, the Middle East, Africa and Asia.

And, on December 8, the company announced another deal, this one with Vehicle Tracking Solutions, which is a Long Island-based fleet management company. The deal will involve a strategic partnership with Globalstar to provide global GPS solutions.

The company is expected to next report earnings during the last week of February 2017. That could give GSAT an opportunity to demonstrate that these types of deals are starting to impact the bottom line. Current analyst expectations are for the company to report EPS of negative $0.02 per share for 4Q 2016.

The company last reported earnings on November 3, for the quarter ended September 30. The good news is that total revenue for the third quarter of 2016 increased by $1.9 million, or 8 percent, from the year-earlier period. This increase was primarily driven by higher service revenue resulting from growth in the company’s average subscriber based and increased ARPU (average revenue per user). However, the bad news is that the company posted a net loss of $2.16 million. That’s a huge drop from the net income of $24.1 million in the year-earlier period. The company attributed this startling drop in net income to a decline of $43.2 million in non-cash derivative gains. So, even though the net income figure looks ugly, at least it wasn’t the result of core operating activities.

Going forward, investors will keep an eye out for more news on the business development front. When GSAT reported 3Q earnings, for example, the company’s CEO specifically pointed to a new strategic partnership with Carmanah Technologies Corporation, whereby Carmanah will design and manufacture a new solar powered M2M satellite product and use the GSAT satellite constellation.

Those are the types of deals that could convince investors to re-think their views on GSAT. If that happens, shares of GSAT could have a steep rise ahead. Given the current share price of $1.40 and a 52-week high of $3.00, that could represent a potential doubling of the company’s stock price over the next year. For more news on Globalstar and other fast-moving penny stocks, please subscribe to now.


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