Maxar Technologies Inc.

MAXR Details

Maxar Technologies Inc. (NYSE: MAXR) is a space and geospatial intelligence company that provides critical space data such as Earth imaging, geospatial data, and analytics to commercial as well as government clients. MAXR operates in two business segments: 1) Earth Intelligence, which delivers high-resolution space-based optical and radar imagery products, and 2) Space Infrastructure, which develops, constructs, and tests communication satellites, on-orbit maintenance, robotic assembly, and space exploration systems.

Completing In-Orbit Testing: On July 29, 2021, MAXR and SiriusXM collectively announced that the SXM-8 satellite, the ninth digital, audio radio satellite the company built for SiriusXM, completed its in-orbit testing and was handed over to SiriusXM. The satellite was launched into space on June 6, 2021.

NASA Approves Preliminary PPE Design: MAXR reported on July 12, 2021, that the Power & Propulsion Element (PPE) it is building for NASA's lunar gateway passed its first Preliminary Design Review (PDR) and remains on pace for a 2024 launch. A second PDR this autumn will confirm if the modified PPE design fulfills mission criteria and is ready for final design approval and production.

Securing a Multi-Year Extension Contract: MAXR announced a contract for its WorldView Legion satellite constellation capacity on July 7, 2021, as part of an extended deal with a significant multinational defense & intelligence client. Under the Direct Access Program, the client can directly download 30 cm-class satellite images to its ground station from Maxar's existing constellation during this multi-year, USD 35 million contract.

Q1FY21 Results: The company reported a slight 2.89% increase in total revenues to USD 392 million in Q1FY21 (ended March 31, 2021) compared to USD 381 million in Q1FY20. However, MAXR reported an increase in net losses to USD 84 million in Q1FY21 vs. USD 48 million in Q1FY20. As of March 31, 2021, the company had cash and cash equivalents of USD 22 million and total debt of USD 2.11 billion.

Key Risks: Satellites are subjected to launch delays and failures due to various reasons. A launch failure resulting in the loss or destruction of a satellite might cause considerable delays in income accruals from the satellite. If the deployed satellite is impaired partially or completely due to unforeseen catastrophic events (meteor shower, collision with space debris, etc.), it may cost both time and money to replace it.

Outlook: For FY21, MAXR expects its total revenue to be around USD 1,760 to USD 1,840 million, with adjusted EBITDA ranging between USD 420 to USD 470 million. The company anticipates its FY21 operating cash flows to range from USD 260 to USD 290 million.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

MAXR Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: MAXR's stock price has surged by 107.29% in the past twelve months and is currently trading at the mid-band of the 52-weeks range of USD 16.52 to USD 58.75. The stock is currently trading around its 50 and 200 DMA levels, and its RSI Index is at 49.64. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 29.45. Considering the significant rise in the stock price, leveraged balance sheet, the long road to significant profitability, other associated risks, and current valuation, we recommend a "Sell" rating on the stock at the current price of USD 35.24, up 1.44% as of July 29, 2021, at 1:57 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV