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Investing.com - Clear Street downgraded BlackSky Technology Inc. (NYSE:BKSY) from Buy to Hold on Tuesday, while raising its price target to $24.00 from $20.00. According to InvestingPro data, the company currently maintains impressive gross profit margins of 69% and operates with a moderate debt level.
The downgrade follows a 112% year-to-date appreciation in BlackSky’s share price, significantly outperforming the Nasdaq’s 8.8% gain during the same period. InvestingPro analysis suggests the stock is currently trading above its Fair Value, with high price volatility being a notable characteristic.
Clear Street cited a balanced risk/reward profile at current valuations, pointing to potential constraints on share price upside due to uncertainty around prospective reductions to the FY2026 EOCL budget.
The firm also noted that significant upward revisions to earnings estimates for 2025-2027 are improbable as they continue to project that Gen-3 revenue traction will require time to develop.
Despite these concerns, Clear Street acknowledged that a recent debt financing has enhanced BlackSky’s liquidity and mitigated refinancing risk, prompting an increase in their EBITDA target multiple to 11x from 9x, which nearly aligns with Maxar’s 2023 go-private valuation of 11.8x.
In other recent news, BlackSky Technology Inc. announced preliminary second-quarter results, revealing revenue of $22.2 million, which fell short of analysts’ expectations of $27.5 million. Consequently, the company revised its full-year revenue guidance to a range of $105 million to $130 million, down from the previous $120 million to $145 million. In a separate development, BlackSky priced a $160 million offering of 8.25% Convertible Senior Notes, an increase from the initially planned $125 million, with proceeds intended to repay existing loans and fund general corporate purposes. Analysts at H.C. Wainwright raised their price target for BlackSky to $28, citing strong long-term prospects despite the recent revenue shortfall. Meanwhile, Canaccord Genuity adjusted its price target slightly down to $27, maintaining a Buy rating, while expressing confidence in potential reversals of proposed budget cuts affecting the Department of Defense’s commercial imagery spending. BlackSky’s backlog of $366 million, primarily from international contracts, provides some insulation against U.S. budget uncertainties. The company’s capital expenditure plans for launching six Gen-3 satellites by year-end remain unchanged, reflecting continued investment in its satellite constellation. These developments come amidst ongoing geopolitical tensions and increased global defense spending, factors that analysts believe could benefit BlackSky’s long-term outlook.
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