On Thursday, Canaccord Genuity adjusted its price target for Spire (NYSE:SR) Global (NYSE: SPIR) shares, a provider of space-based data and analytics, reducing it to $20.00 from the previous $24.00, while retaining a Buy rating on the stock.
The firm's decision follows Spire Global's recent 10-K filing, where the company cautioned about the accelerated depreciation of its LEMUR satellites due to the solar cycle.
The impact on the performance of the satellites' RF instruments was more significant than initially expected. Despite this challenge, Canaccord Genuity sees this as a relatively rare occurrence, suggesting that such solar events are decadal.
Canaccord Genuity remains optimistic about Spire Global's prospects. The firm believes that the company is well-positioned to navigate future risks, thanks to improvements in software and the development of more robust hardware. These advancements are informed by real-world data on how solar flare activity and atmospheric expansion affect the LEMUR fleet.
The revised price target of $20.00 is based on a 3.8x enterprise value to revenue (EV/Revenue) multiple. This multiple is applied to Canaccord Genuity's 2024 revenue estimate for Spire Global, which stands at $129 million.
The firm's maintained Buy rating indicates its continued confidence in the company's long-term growth potential despite the near-term challenges presented by the solar cycle.
InvestingPro Insights
As Spire Global (NYSE: SPIR) navigates the challenges posed by the solar cycle's impact on its satellite fleet, real-time data and insights from InvestingPro provide a clearer picture of the company's financial health and market performance. InvestingPro Data highlights a market capitalization of $275.76 million and a notable revenue growth of 31.69% over the last twelve months as of Q4 2023. Despite not being profitable in the last year, with an adjusted P/E ratio of -4.36, the company maintains an impressive gross profit margin of 59.86%.
InvestingPro Tips reveal that analysts are optimistic about sales growth in the current year, which aligns with Canaccord Genuity's positive outlook. However, they also caution about the company's cash burn rate and high price volatility, which could impact investor sentiment. Moreover, while Spire Global's liquid assets exceed short-term obligations, the valuation implies a poor free cash flow yield.
For investors seeking additional insights, there are 12 more InvestingPro Tips available for Spire Global, which can be accessed through InvestingPro. And for those looking to delve deeper into the investment potential of Spire Global, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.