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Telesat's Stock Rises 10.3% Amid Major Funding Announcement

Telesat shares saw a 10.3% increase fueled by C$2.54 billion funding for its satellite network. While the EPS is expected to be a loss, revenue projections highlight challenges. Investors are optimistic about Telesat's growth potential in boosting Canadian Internet accessibility.

Date: 
AI Rating:   5

Telesat experienced a notable 10.3% rise in share price after securing significant funding of C$2.54 billion from the Canadian and Quebec governments aimed at advancing its Lightspeed Low Earth Orbit (LEO) broadband satellite constellation. This increase is substantial, especially when considering the stock's overall 20.2% gain over the past month, which suggests strong investor interest and positive sentiment in the company.

The secured funding will be dedicated to establishing the Telesat Lightspeed network, which encompasses satellite and terrestrial infrastructure to enhance Internet and 5G network accessibility in Canada. This initiative is also projected to facilitate job creation and bolster the Canadian economy, as Telesat has reportedly increased its workforce by 33% within the past year.

However, despite the positive funding news, Telesat anticipates a quarterly loss of $0.16 per share, indicating that the company is still facing financial challenges. This loss represents a significant year-over-year improvement of +95.8%, but this may not fully inspire confidence among investors, especially as the company's revenue projections are set at $104.19 million, which marks a downturn of 20.2% compared to the prior year. This could signal potential issues with revenue growth going forward.

Interestingly, while the consensus EPS estimate has remained unchanged over the past 30 days, the lack of upward revisions in earnings estimates may limit the stock's further upward movement in the absence of positive news or developments. Investors are encouraged to closely monitor any shifts in earnings expectations to gauge potential future stock performance.

Overall, while Telesat is benefitting from the recent funding announcement, the expected losses and decreasing revenue highlight a precarious balance that could influence stock price dynamics in the near future. As a member of the Satellite and Communication industry, Telesat's performance can also impact stock prices of similar companies, including EchoStar, which also posted a significant rise in its stock value.

Stocks:  TSAT SATS