BlackSky stock target raised to $20 at H.C. Wainwright

On Monday, H.C. Wainwright adjusted their outlook on BlackSky Technology Inc. (NYSE:BKSY) by increasing the price target to $20.00, up from the previous $12.00, while maintaining a Buy rating on the company’s shares. According to InvestingPro data, the stock is currently trading above its Fair Value, with impressive gains of 38.9% year to date, outpacing the Russell 2000’s 2.6% rise. The company has shown remarkable momentum, delivering a 85.5% return over the past six months.

The firm’s analyst attributed BlackSky’s outperformance to a series of new, sizeable contract announcements made in January. Notably, last week, the company disclosed a new seven-year contract valued at $100 million with an existing defense sector customer. Earlier in January, BlackSky was chosen as a vendor for the National Geospatial-Intelligence Agency’s $200 million Luno B commercial data contract, which includes a five-year base ordering period. InvestingPro data reveals the company maintains impressive gross profit margins of 69.6% and operates with a moderate debt level, suggesting financial stability to support these long-term contracts.

H.C. Wainwright believes that these long-term contracts not only enhance the company’s revenue visibility but also indicate an expected increase in demand for BlackSky’s imagery and analytics products. Customers committing to long-term contracts now are seen as securing future capacity in anticipation of rising demand. The company has demonstrated strong revenue growth of 36.8% in the last twelve months, and InvestingPro subscribers can access 14 additional key insights about BlackSky’s growth prospects and financial health.

The positive developments continued for BlackSky in January with the shipment of its first Gen-3 satellite, gearing up for a February launch. The firm expects the launch of additional Gen-3 satellites throughout 2025 to open up new revenue streams for BlackSky, potentially leading to a significant uptick in second-half revenue for the year and driving organic growth in 2026, which could approach 30%.

In light of the improved business outlook and increased revenue visibility, H.C. Wainwright’s new price target reflects confidence in BlackSky’s continued execution of its strategy. The analyst suggests that as BlackSky progresses on its current path, the company’s potential for cash generation becomes more apparent, which could draw new investors to BKSY shares.

In other recent news, BlackSky Technology Inc. has secured significant contracts, including a $100 million deal with an international defense sector partner for its Gen-3 real-time, space-based monitoring capabilities. The seven-year contract guarantees annual capacity for BlackSky’s current Gen-2 and forthcoming Gen-3 satellite imagery and AI-enabled analytics services through 2032. Also, BlackSky has been awarded a one-year extension to its existing contract with the National Reconnaissance Office (NRO), ensuring the delivery of high-frequency, low-latency Gen-2 imagery services until mid-2026.

In addition to these major contracts, the company has reported a 22% year-to-date revenue increase and a positive adjusted EBITDA for the fourth consecutive quarter. BlackSky has also raised over $45 million for its baseline Gen 3 satellite constellation. The first Gen 3 satellite is nearing launch readiness, with a launch window expected in early 2025.

These recent developments underscore BlackSky’s continued growth and progress in the industry. The company maintains its 2024 revenue guidance of $102 to $118 million and adjusted EBITDA of $8 to $16 million. Despite some expected revenue delays from Q3 to Q4, BlackSky anticipates approximately $26 million in milestone payments over the next 12 months. Regular Gen 3 satellite launches are planned to begin in 2025 to meet increasing customer demand.

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