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On Friday, Benchmark analysts reiterated a Buy rating and a $17.00 price target on BlackSky Technology Inc. (NYSE:BKSY). The affirmation came after BlackSky reported a fourth-quarter earnings beat, with improved gross margins reaching 73.13%, demonstrating better leverage in their business model. According to InvestingPro data, the company maintains a healthy current ratio of 4.1x, with liquid assets well exceeding short-term obligations. Analysts at Benchmark noted that while the FY25 EBITDA guidance seemed initially about $10 million below the Street’s expectations, the recent acquisition of Thales (EPA:TCFP)’ portion in the LeoStella joint venture late in FY24 accounted for approximately $10 million in additional overhead costs. These costs are expected to decrease as production of GEN-3 satellites ramps up.
BlackSky’s derisking of GEN-3 satellite production was highlighted as a significant event that may not be fully appreciated by the market. With the stock currently trading at $9.92, InvestingPro analysis suggests the shares are slightly undervalued, despite a recent 30.82% decline over the past week. The advanced resolution of these satellites is expected to open up access to additional contracts. Furthermore, there is a growing interest from international owner/operators in BlackSky’s satellite capabilities, particularly as global intelligence, surveillance, and reconnaissance (ISR) needs evolve due to geopolitical shifts.
The full acquisition of LeoStella is positioned to benefit BlackSky, especially as international customers increasingly prefer owning satellite constellations over merely renting access to ISR capabilities. Benchmark highlighted that India and Indonesia have initiated ownership deals with BlackSky, which are expected to expand in scope. The trend towards ownership was partly sparked by the sensitivity of accessing satellite ISR from foreign constellations during the onset of the Ukrainian War, leading to a greater demand for ISR assets that cannot be externally controlled.
BlackSky’s GEN-3 satellites, combined with artificial intelligence (AI), are considered a potent offering in the market. Notably, BlackSky owns the training of these AI systems, which adds to the value proposition for international intelligence agencies seeking autonomous ISR capabilities. With revenue growing at 8.04% and analyst targets suggesting up to 70% potential upside, the company shows promising momentum. Benchmark analysts concluded that the initial market reaction to the LeoStella acquisition might have been overstated and anticipate that the deployment and growth of GEN-3 satellites, particularly for international customers, will be a compelling development for the company. For a deeper understanding of BlackSky’s potential, investors can access the comprehensive Pro Research Report and additional financial metrics through InvestingPro, which offers exclusive insights into the company’s financial health and growth prospects.
In other recent news, BlackSky Technology Inc. reported its financial results for the fourth quarter of 2024, revealing a total revenue of $102.1 million for the year. The company’s revenue fell short of expectations, with fourth-quarter revenue at $30.4 million, below H.C. Wainwright’s projection of $36.3 million and the Street’s consensus of $33.9 million. Despite this shortfall, BlackSky achieved its first full year of positive adjusted EBITDA, reaching $11.6 million, a significant improvement from a loss of $1 million in 2023. The company has also issued revenue guidance for 2025, projecting growth of 30% year-over-year, with revenue expected to be between $125 million and $142 million.
H.C. Wainwright analysts maintained their Buy rating on BlackSky’s stock, keeping a $20 price target, indicating optimism about the company’s future prospects despite the recent revenue miss. BlackSky’s successful launch of its first Gen-3 satellite has been well-received by customers, and the company has secured contracts worth over $150 million, reflecting rising demand for its services. The company plans to launch additional Gen-3 satellites in 2025, which analysts believe will enhance financial results in the latter half of the year.
The company’s recent contract wins include a seven-year agreement valued at over $100 million and contracts totaling approximately $20 million in India, showcasing its expanding international footprint. BlackSky’s strategic acquisition of Leo Stella, now fully integrated, is expected to provide better control over satellite manufacturing and support the rapid deployment of its Gen-3 constellation. Looking forward, BlackSky aims to leverage its technological advancements to meet growing customer demand and secure long-term revenue visibility.
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