Shares of satellite communications company Globalstar (NYSEMKT:GSAT) closed 14.3% higher Friday after meeting earnings expectations for fiscal third quarter 2020. Analysts had predicted that Globalstar would lose about $0.01 per share in Q3 -- and that's precisely what Globalstar did, reporting $0.01 per share in net losses (flat against last year) on $32.8 million in sales (down 15%).
Globalstar blamed "the lingering impact of the oil and gas industry downturn" and "a decline in subscriber-driven revenue streams" for its sales decline but insisted that it still sees opportunities in providing satellite-borne Internet of Things connectivity, "as well as emergency messaging and tracking for both consumers and enterprises."
Management did not provide earnings guidance for the fourth quarter or for the year as a whole. That being said, analysts who follow the company generally agree that Q4 is likely to be unprofitable as was Q3, with losses of $0.02 per share expected. For the full year, analysts are forecasting breakeven earnings but a decline in sales of 2%.
That might not sound like much but, relative to the big decline in sales seen in Q3, a mere 2% decline for the year as a whole may actually imply an improvement in Globalstar's business (assuming the analysts are right, that is) going forward. The fact that Globalstar hit consensus targets for the quarter, combined with a consensus calling for less revenue slippage in the coming quarter, may be why Globalstar stock moved higher today.