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On Friday, Cantor Fitzgerald maintained its Overweight rating on Planet Labs (NYSE:PL) shares, with a steady price target of $6.30, representing significant upside from the current price of $3.36. The firm's analyst, Colin Canfield, supports the rating with a valuation approach that balances 50% enterprise value to EBITDA (EV/EBITDA) and 50% price to sales ratio, against the financial year 2027 estimates. According to InvestingPro data, analyst targets range from $4.50 to $8.00, with the stock showing high volatility over the past year.
Canfield believes that Planet Labs' potential for high incremental margins, which are expected to be over 50%, aligns with the company's current impressive gross profit margin of 57.65%. Along with the possibility of significant government contract expansion and the ability to increase prices similar to other retail-driven companies, this provides a solid foundation for the company to exceed performance expectations. InvestingPro analysis reveals the company maintains strong liquidity with a current ratio of 2.13 and holds more cash than debt on its balance sheet. He acknowledges that the company trades at a robust premium compared to cost-plus intelligence companies, which usually trade around 2-3 times sales and 12-16 times EBITDA.
Despite the premium, Canfield is optimistic about the company's future, especially considering its pricing strategy, which he expects will enable profit generation similar to that of a data-subscription business. He notes that if Planet Labs' margin trajectory begins to align more closely with cost-plus intelligence companies, which are typically fixed at around 10% EBITDA, there might be a need to reassess the current thesis.
However, Canfield expresses confidence in the company's pricing power and its ability to support more lucrative data-subscription-like profit generation. The firm's valuation method assumes a balance between growth potential and current financial metrics, suggesting a belief in the company's ability to maintain its competitive edge and deliver value to its shareholders.
In other recent news, Planet Labs has announced several notable developments. The company reported a mixed financial performance for the fourth quarter of fiscal year 2025, with an adjusted EBITDA of $2.4 million, surpassing expectations of $1.4 million, and a non-GAAP gross margin of 64.7%. However, guidance for fiscal year 2026 was less optimistic, with an anticipated non-GAAP gross margin of 55.0% to 57.0% and an adjusted EBITDA loss forecasted between $13.0 million and $7.0 million. In addition to financial updates, Planet Labs expanded its collaboration with onX, providing near-daily satellite imagery to enhance onX's outdoor recreation apps. The company also secured a contract with the European Space Agency for Greece's National SmallSat Programme, aiming to bolster Greece's satellite technology capabilities. Analysts from Benchmark and Cantor Fitzgerald maintained their ratings on Planet Labs, with price targets of $7.00 and $6.30, respectively, citing the impact of a significant $230 million agreement with JSAT. Furthermore, Planet Labs successfully captured first light images from its Pelican-2 satellite, marking progress in its technological advancements. These recent developments highlight Planet Labs' strategic efforts to expand its market presence and enhance its operational capabilities.
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