Deutsche Bank has upgraded communications and defense contractor Viasat from Hold to Buy, citing an improved near-term growth outlook tied to forthcoming satellite activations and increasing confidence that the company may separate its Defense & Advanced Technologies (DAT) unit.
The brokerage highlighted two large satellites scheduled to become operational later this year as primary contributors to the company’s revenue potential, saying those assets should support Viasat’s growth trajectory once they are online. At the same time, Deutsche Bank said momentum appears to be building toward a possible spin-off of the DAT business, which the bank believes could realize a higher valuation on a standalone basis when compared to peers.
Reflecting that view, the analyst firm adopted a sum-of-the-parts valuation methodology that values Viasat’s defense operations independently from its core satellite communications segment. Deutsche Bank noted ongoing structural pressure on the company’s satellite communications activities from competitors deploying low-Earth orbit networks, but said the prospect of a DAT separation changes the overall investment thesis.
In addition to the potential corporate separation, the bank pointed to management’s apparent shift toward prioritizing shareholder returns. Deutsche Bank suggested that moves to enhance shareholder value may extend beyond a DAT spin-off and could include other measures over time, such as monetizing or otherwise optimizing spectrum assets.
Using its revised valuation approach and applying fiscal 2027 EBITDA estimates, Deutsche Bank raised its price target for Viasat to $48 from $36. The new target implies about 15% upside from the level referenced by the bank.
Context and implications
- Operational catalysts: Two major satellites expected to enter service later this year are central to Deutsche Bank’s positive near-term outlook.
- Strategic shift: A potential DAT spin-off is being treated as a value-unlocking event that warrants valuing the defense business separately.
- Return of capital focus: Management’s greater emphasis on shareholder returns could prompt further actions such as spectrum monetization or other optimization steps.
The bank’s analysis ties near-term operational milestones to longer-term corporate restructuring and capital allocation choices, and it adjusts valuation to reflect these separate components of the business.