The space industry is achieving continued growth, bolstered by private investments and new technological innovations. According to the second-quarter 2021 Space Report, the global space economy rose to $447 billion in 2020, which is 55% more than a decade ago.
The commercial segment is the fastest advancing segment of the space sector and is expected to drive the future of the industry. Despite the pandemic downturns, commercial space activity grew 6.6% to nearly $357 billion in 2020, representing close to 80% of the total space economy.
Backed by government funding and increasing private investments, the space industry is expected to keep growing. And so, Wall Street analysts predict space stocks Virgin Galactic Holdings, Inc. (SPCE) and Maxar Technologies Inc. (MAXR) to rally by more than 50%.
Virgin Galactic Holdings, Inc. (SPCE)
SPCE, which is headquartered in Las Cruces, N.Mex., is an integrated aerospace company that develops human spaceflight for private individuals and researchers in the United States. It also manufactures air and space vehicles. In addition, it designs, develops, manufactures spacecraft, and engages in ground and flight testing, and post-flight maintenance of spaceflight vehicles.
On June 25, SPCE announced that the Federal Aviation Administration (FAA) updated the company’s existing commercial space transportation operator license to allow the spaceline to fly customers to space. This should allow significant growth and enable the company to emerge as a leader in the commercial space industry.
SPCE’s revenues increased 139.9% year-over-year to $0.57 million in the six months ended June 30. Its gross profit grew 681.5% from its year-ago value to $0.51 million. Its cash and cash equivalents rose 51.3% year-over-year to $564.66 million.
Analysts expect SPCE’s revenues to increase 831.8% year-over-year to $2.22 million in the fiscal period ending December 31, 2021. In addition, the company’s revenue and EPS are expected to increase 790% and 35%, respectively, in the following year, versus the current year. Over the past year, SPCE has gained 38.3% in price to close yesterday’s trading session at $24.25.
Among 11 Wall Street analysts that rated SPCE, three rated it Buy while six rated it Hold and two rated it Sell. The $38.44 median price target indicates a 58.5% potential upside from its last closing price. The 12-month price targets range from a low of $25.00 to a high of $51.00.
Maxar Technologies Inc. (MAXR)
MAXR in Vancouver, Canada, provides earth intelligence and space infrastructure solutions in the United States, Asia, South America, Europe, the Middle East, Australia, Canada, and internationally. It serves the U.S. and other international government agencies, such as defense and intelligence agencies, as well as commercial customers in various markets.
On August 4, MAXR announced that the U.S. National Reconnaissance Office (NRO) had exercised the second of three, one-year options on the company’s existing Enhanced View Follow-On (EVFO) service level agreement. MAXR’s high-resolution satellite imagery serves a vital role for the U.S. defense and intelligence communities. This extended partnership with the U.S. government demonstrates MAXR’s immense potential and dominance in the industry.
On the same day, the company also announced its agreement to manufacture a new geostationary communications satellite for its longtime customer SiriusXM. MAXR continues to portray its advanced technological capabilities through its service agreements with customers from around the globe.
MAXR’s total revenue increased 7.7% year-over-year to $473 million in its fiscal second quarter, ended June 30. The increase was driven primarily by a $33 million increase in revenue in its Space Infrastructure segment. Its operating income stood at $56 million, up 40% from the same period last year.
A $447.87 million consensus revenue estimate for its fiscal third quarter, ending September 30, 2021, indicates a 2.7% increase year-over-year. The Street expects the company’s EPS to rise 90.5% from the prior year quarter to $0.18 in the current quarter.
Of the seven Wall Street analysts that rated MAXR, three rated it Buy while four rated it Hold. The $43.29 median price target indicates a potential 58.3% upside from its $27.34 last closing price. The 12-month price targets range from a low of $36.00 to a high of $52.00.
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SPCE shares rose $0.05 (+0.20%) in after-hours trading Friday. Year-to-date, SPCE has gained 3.37%, versus a 19.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...
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