BlackSky stock holds $20 target despite revenue miss

Friday, BlackSky Technology Inc. (NYSE:BKSY) shares experienced a significant decline, dropping 24.2% against the Russell 2000’s 1.6% fall. The space technology company, currently valued at $307 million, has seen its stock decline over 30% in the past week. This drop followed the company’s announcement of fourth-quarter 2024 revenues that did not meet expectations. H.C. Wainwright analysts maintained their Buy rating and $20.00 price target on the stock, despite the softer financial performance. According to InvestingPro analysis, the stock appears undervalued at current levels, with analyst targets ranging from $9 to $26.

The company reported a revenue of $30.4 million, which was below H.C. Wainwright’s projection of $36.3 million and the Street’s consensus of $33.9 million. Despite the miss, InvestingPro data shows BlackSky maintains impressive gross profit margins of 73% and has achieved 8% revenue growth over the last twelve months. The analysts pointed out that the fourth quarter of 2024 had tougher comparisons due to one-time revenue events in the same quarter of the previous year, which totaled $9.0 million. Nevertheless, they noted that on a normalized basis, the revenue showed a modest year-over-year increase.

Looking ahead, BlackSky’s successful launch of its first Gen-3 satellite in the first quarter of 2025 has garnered positive feedback from customers regarding image quality. Moreover, the company has recently won contracts worth over $150 million, indicating rising consumer demand influenced by increased geopolitical instability. With a strong current ratio of 4.1, BlackSky maintains ample liquidity to fund its growth initiatives. Analysts believe that the customers’ willingness to enter long-term contracts is a recognition of the potential for demand to grow, ensuring future capacity.

The analysts are optimistic about the future revenue opportunities as more Gen-3 satellites are expected to be launched throughout 2025. They anticipate these developments to contribute to stronger financial results in the second half of the year. Alongside the fourth-quarter report, BlackSky issued revenue guidance for 2025, which aligns with current Street expectations. H.C. Wainwright views this guidance as a positive indicator following the weaker fourth-quarter revenue.

In conclusion, despite the recent revenue shortfall, H.C. Wainwright analysts expect BlackSky’s shares to recover and approach their $20 price target as the company’s business outlook and revenue visibility improve. The firm’s analysts reaffirm their Buy rating on BKSY shares.

In other recent news, BlackSky Technology reported significant financial achievements for the fourth quarter of 2024, with total revenue reaching $102.1 million. The company marked its first full year of positive adjusted EBITDA, amounting to $11.6 million, a notable improvement from a loss of $1 million in 2023. Despite these financial gains, the company’s stock experienced a decline, reflecting investor concerns over future earnings projections and capital expenditures planned for 2025, which are estimated between $60 million and $70 million. Looking ahead, BlackSky forecasts a 30% revenue growth for 2025, projecting revenues between $125 million and $142 million, supported by the planned launch of additional Gen3 satellites. The company also highlighted a recent seven-year contract win valued at over $100 million with an international customer, indicating strong demand for its high-resolution imagery services. Additionally, BlackSky secured contracts worth approximately $20 million to support India’s earth observation capabilities, marking its entry into the Indian market. The company acquired full ownership of Leo Stella, enhancing its control over satellite manufacturing, which is expected to provide better visibility into its supply chain and production processes.

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