On Monday, Redwire Corporation (NYSE:RDW) experienced a shift in stock rating as a B.Riley analyst moved the company from a Buy to a Neutral stance, while simultaneously raising the price target to $8.00, up from $6.00.
The adjustment in rating follows a significant year-to-date increase in Redwire's share price, which has climbed over 145%, compared to the 8% rise of the Russell 2000 index.
The change in sentiment by the analyst comes amid a series of stock sales by Redwire's controlling owner, AE Industrial Partners, a private equity firm that holds approximately 55% of Redwire's equity. Over the past week, AE Industrial Partners has sold around 390,000 shares of Redwire.
The new price target of $8.00 is anchored on a valuation multiple that remains unchanged at 2x the company's projected future enterprise value to sales ratio. This projection takes into account the preferred stock that could potentially be converted into common shares.
The analyst's forecast for Redwire includes a revenue estimation of $398 million for the fiscal year 2026, marking a year-over-year increase of 13.5%. Additionally, the company is expected to achieve an EBITDA of $43 million, which would represent a margin of 10.9%, and free cash flow is anticipated to reach $22 million.
The analyst's decision reflects a cautious approach to the recent performance of Redwire's shares and the actions of its major shareholder. The upgraded price target suggests a recognition of the company's growth potential, despite the neutral rating on the stock.
In other recent news, Redwire Corporation has been making significant strides in the space industry. The company reported a 52.4% increase in revenue for the first quarter of 2024, reaching $87.8 million, despite a net loss of $8.1 million. Redwire also affirmed its full-year revenue guidance of $300 million, suggesting a 23% year-over-year growth rate.
In terms of major projects, Redwire secured a follow-on order from Thales Alenia Space for more Roll-Out Solar Array (ROSA) wings for the Space Inspire satellite series. The company was chosen by the Defense Advanced Research Projects Agency (DARPA) for a pioneering satellite project, the Otter program.
Contracts were also secured from the European Space Agency for the development of a robotic arm prototype for the Argonaut Lunar Lander, and from NASA's Jet Propulsion Laboratory for a feasibility study of a commercially-led Mars spacecraft.
Moreover, Redwire announced the development of Phantom, a new Very Low Earth Orbit spacecraft platform, and is working on the Phantom European VLEO Platform for the European Space Agency's Skimsat program, in collaboration with Thales Alenia Space UK. These are the most recent developments for Redwire Corporation in its ongoing mission to provide space infrastructure solutions.
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