Morgan Stanley initiates coverage on Firefly Aerospace stock with Equalweight rating

Investing.com - Morgan Stanley initiated coverage on Firefly Aerospace Inc (NYSE:FLY) with an Equalweight rating and a $52.00 price target on Tuesday. The stock currently trades at $45.37, with InvestingPro data showing the company’s market capitalization at $6.52 billion.

The investment bank’s base case valuation leverages approximately 9 times multiple on Firefly’s projected 2027 sales of about $756 million, according to the research note.

Morgan Stanley forecasts a revenue compound annual growth rate (CAGR) of approximately 110% from 2024 to 2028 for the space launch provider, with 2027 estimated EBITDA margin of about 11%.

The assigned 9x multiple represents a premium compared to space infrastructure and exploration peers like Intuitive Machines (NASDAQ:LUNR) at 3.1x, Redwire (NYSE:RDW) at 3.0x, Voyager Space (NYSE:VOYG) at 4.2x, and MDA (TSX:MDA) at 2.3x, while remaining at a discount to Rocket Lab (NASDAQ:RKLB) at 20x and Kratos (NASDAQ:KTOS) at 12x.

Morgan Stanley noted that Firefly’s limited flight heritage, with only about six launch attempts total, will restrict its potential to trade at a double-digit revenue multiple until further risk reduction is demonstrated.

In other recent news, Firefly Aerospace has announced the pricing of its upsized initial public offering at $45 per share, with 19,296,000 shares of common stock being offered. The company is expected to start trading on the Nasdaq Global Market under the symbol "FLY." Additionally, Firefly Aerospace has secured a significant $176.7 million contract from NASA for a lunar mission, aiming to deliver payloads to the Moon’s south pole by 2029. This mission will involve the Elytra orbital vehicle and Blue Ghost lunar lander to evaluate resources and study conditions on the lunar surface.

In analyst activity, JPMorgan has initiated coverage on Firefly Aerospace with an Overweight rating and a $55 price target. Goldman Sachs has also started coverage with a Neutral rating and a $54 price target, highlighting Firefly’s unique position in the launch industry. Jefferies has given Firefly a Buy rating, setting a price target at $60, and emphasized the company’s successful launch of the Alpha vehicle. These developments reflect the growing interest and diverse perspectives from major financial institutions regarding Firefly Aerospace’s potential in the space industry.

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