On Monday, H.C. Wainwright has updated its outlook on BlackSky Technology Inc. (NYSE:BKSY) stock, raising the price target to $15.00 from the previous $2.50 while maintaining a Buy rating on the company's stock. The adjustment comes after a series of contract wins for BlackSky, including a significant multi-year agreement with NASA.
The NASA contract, announced earlier in September, is part of the Commercial Smallsat Data Acquisition Program (CSDAP) and could be worth up to $476.0 million, extending through 2028. BlackSky will provide the agency with high-revisit satellite imaging data to aid Earth observation research. Furthermore, last week, BlackSky secured a seven-figure deal with HEO, an Australian firm specializing in non-Earth imagery services.
These new contracts, along with the existing backlog, are seen as supportive of H.C. Wainwright's revenue growth forecast of 25.4% for BlackSky by 2025. The firm also highlights the potential revenue boost from the upcoming launch of BlackSky's higher resolution Gen-3 satellites, which could offer current customers enhanced capabilities at higher price points.
Amid concerns about potential dilutive capital raises following a recent reverse share split in early September, H.C. Wainwright believes that BlackSky is well-positioned financially. The company is expected to meet its 2024 capital expenditure demands through a combination of cash on hand, expected cash payments over the next year, and a new commercial bank line, making a near-term capital raise unlikely.
H.C. Wainwright anticipates that as BlackSky continues to execute its strategy, the path to cash generation will become more apparent, potentially drawing new investors to the company's shares. The firm's revised price target reflects these developments and the post-reverse split stock valuation.
In other recent news, BlackSky Technology Inc. has experienced notable progress in its financial and operational performance. The company reported a 29% year-over-year revenue growth in the second quarter of 2024, achieving a total of $24.9 million. This increase can be attributed to the robust demand for its space-based intelligence solutions, especially from government clients worldwide.
Additionally, BlackSky secured $40 million in new contracts and extensions, contributing to a positive adjusted EBITDA for the third consecutive quarter.
The company has also been awarded the 2024 Novaspace Leading Earth Observation Business Award, recognizing its advancements in delivering real-time, space-based intelligence. This recognition underscores the company's role in leading the Earth observation industry towards dynamic, real-time monitoring capabilities.
Furthermore, BlackSky has secured a significant contract with NASA, potentially worth up to $476 million, to provide satellite imaging data.
BlackSky's Board of Directors has approved a 1-for-8 reverse stock split of its Class A common stock. In the view of Lake Street Capital Markets, despite a slight miss in revenue for the quarter, BlackSky's achievement of its third consecutive quarter of positive AEBITDA is notable. Despite uncertainties, BlackSky maintains its full-year 2024 revenue guidance between $102 million and $118 million. These are the recent developments for BlackSky.
InvestingPro Insights
Recent data from InvestingPro underscores BlackSky Technology Inc.'s (NYSE:BKSY) potential and challenges. With a market capitalization of $104.4 million and a notable revenue growth of 43.02% over the last twelve months as of Q2 2024, BlackSky's financial trajectory appears promising. This is further supported by an impressive gross profit margin of 69.14% in the same period, indicating the company's ability to maintain profitability on its core services. Nevertheless, the company's struggles are evident in its negative P/E ratio of -3.61 and the significant share price decline over the past month, with a 45.61% drop.
InvestingPro Tips suggest that while BlackSky has impressive gross profit margins, it is quickly burning through cash and may have trouble making interest payments on debt. Analysts do not anticipate the company will be profitable this year, which aligns with the reported negative operating income margin of -41.66%. The stock's high price volatility and its trading near a 52-week low could be of interest to investors looking for potential bargains, especially as the company's liquid assets exceed its short-term obligations, suggesting some degree of short-term financial stability.
For those considering an investment in BlackSky, the InvestingPro platform offers additional insights, including 15 more InvestingPro Tips, to help make informed decisions. The platform's fair value estimate for BlackSky stands at $6.33, which is significantly lower than the analyst target but suggests that the stock has some upside potential from its previous close of $5.7.
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