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On Monday, B.Riley raised the stock rating of Redwire (NYSE: RDW) from Neutral to Buy, significantly increasing the price target from $9.50 to $27.00. The adjustment reflects a new valuation benchmark of 6x pro forma enterprise value/sales, a substantial rise from the previous 2.5x. The firm's analysts attribute this change to the anticipated impact of Redwire's recent acquisition of Edge Autonomy, which was announced on January 21, 2025. The stock has shown remarkable momentum, with InvestingPro data showing a 44% return in the past week and an impressive 642% gain over the last year.
The acquisition is seen as a transformative move for Redwire, positioning it as a comprehensive space infrastructure and defense technology company. It spans multiple domains, including medium Earth orbit (MEO), geostationary orbit (GEO), low Earth orbit (LEO), and very low Earth orbit (vLEO), and now extends to airborne-based platforms. B.Riley highlights the strategic importance of Edge Autonomy's uncrewed autonomous systems technology, which complements Redwire's existing operations, uniting terrestrial and space-based networks. With a current market capitalization of $1.42 billion and a beta of 2.18, InvestingPro analysis indicates the stock trades with significant volatility, typical for companies in transformative growth phases.
Financially, the merger is expected to be beneficial, with Redwire boasting a strong business book and healthy margins. The company reported $222 million in sales and $72 million in EBITDA—a 32% margin—for the trailing twelve months ending September 30, 2024. Edge Autonomy also contributes positively with a backlog of $78 million as of September 30, 2024, which, despite appearing smaller compared to Redwire's $330 million backlog, is noteworthy for its rapid turnover, cycling approximately every six months. According to InvestingPro data, Redwire has demonstrated strong revenue growth of 27.35% in the last twelve months, though it currently operates with moderate debt levels. The platform's analysis suggests the company is trading above its calculated Fair Value, with analysts expecting profitability improvements in the coming year.
B.Riley's analysts are optimistic about the future of Redwire post-acquisition, factoring in the enhanced financial projections for FY26. The new price target of $27 is predicated on these updated forecasts and the expected synergies from integrating Edge Autonomy's technologies into Redwire's business model. The firm's analysts see this move as a key step in Redwire's evolution into a leader in the space and defense technology sectors.
In other recent news, Redwire Corporation has been making significant strides in the aerospace sector, with a focus on acquisitions, revenue growth, and securing substantial contracts. The company recently announced a strategic acquisition of Edge Autonomy, a company specializing in uncrewed airborne systems. This transaction, valued at $925 million, is anticipated to position Redwire favorably in multi-domain activities. Cantor Fitzgerald and Jefferies analysts have maintained positive ratings on Redwire, following the endorsement of this acquisition.
Redwire also reported a 9.6% increase in revenue, reaching $68.6 million in the third quarter. Their full-year revenue forecast stands at $310 million, indicating a 27% growth rate. Additionally, the company secured a substantial contract with the Air Force Research Laboratory, valued at $45.5 million over five years. H.C. Wainwright views this contract as further evidence of Redwire's effective execution of its expansion plans.
These recent developments indicate Redwire's strategic growth initiatives and robust financial performance. The company's commitment to innovation and strategic acquisitions, coupled with a strong financial outlook, positions it well for future developments in the aerospace sector.
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