Globalstar (GSAT) stock was trading sharply higher in the early price action on Aug. 30 amid reports that Apple could partner with the company to bring satellite communication to the iPhone 13. What’s the forecast for GSAT stock amid the rumored partnership with Apple?
GSAT has risen six-fold this year and is among the best performing penny stocks of 2021. The stock made a 52-week high of $2.98 and has a 52-week low of $0.29. The company provides satellite solutions for individuals as well as businesses.
GSAT and Apple partnership
TFI Securities analyst Ming-Chi Kuo said in a note over the weekend that Apple could bring satellite connectivity to the iPhone 13. Many people refer to Apple’s next iPhone, which is expected in the fall, as “iPhone 13.” It isn't the official name yet and the timing of the launch isn't certain.
Usually, Apple launches new iPhone models in the fiscal fourth quarter that ends in September. The sales spike due to the new launch, which helps buoy year-end numbers. In 2020, Apple had to delay the launch of the iPhone from September to October due to the COVID-19 pandemic.
Kuo predicts that Apple could partner with Globalstar for satellite connectivity. “There are many potential scenarios for Apple's business model cooperation with Globalstar," said Kuo. According to Kuo, "The simplest scenario is that if the user's operator has already teamed with Globalstar, the user can directly use Globalstar's satellite communication service on the iPhone 13 through the operator's service."
Globalstar stock forecast
According to the data compiled by CNN Business, only two analysts cover GSAT stock. While Morgan Stanley has a sell rating with a $0.55 target price, B. Riley is bullish on the stock and assigned it a target price of $3.25 in June. Overall, GSAT has a median target price of $1.90, which is a discount over its current prices.
While initiating a buy rating on GSAT, B. Riley analyst Mike Crawford said that Globalstar “and its sponsors, after years of development, support, and patience, are at long last starting to realize a return on satellite system and spectrum assets.”
He also said, “We believe many investors perceive GSAT as a long-suffering, over-leveraged mobile satellite services provider with spectrum assets that have been difficult to monetize.”
According to Crawford, 2021 is “an excellent time to buy GSAT before the market digests this change.” The stock spiked after the bullish note.
What the Apple partnership would mean for Globalstar
If the partnership with Apple happens, it could be a game-changer for Globalstar given the massive iPhone shipments. Markets also realize the importance of the deal and have sent the stock north on Aug. 30 amid the rumor.
Looking at the macro picture, the demand for satellite devices is expected to increase, which bodes well for players like Globalstar. With an NTM EV-to-sales multiple of 24.1x, GSAT stock might appear overvalued in terms of absolute valuations. However, it's a play on the expected uptick in demand for its services.
GSAT stock trades above all of the key moving averages after the spike. The stock seems to be in the overbought territory with a 14-day RSI of 76.5.