Blacksky Technology Inc

Blacksky Technology Inc. (NYSE: BKSY) is a provider of real-time geospatial intelligence. The company monitors and analyses critical places, economic assets, and events on the world using artificial intelligence (AI). Spectra AI's software-as-a-service (SaaS) platform provides users with automatic alerts, data, and insights to aid in day-to-day decision-making. Its products are meant to serve a variety of government and commercial applications, including as national and homeland security, supply chain intelligence, crisis management, critical infrastructure monitoring, economic intelligence, and more.

Key Highlights

• On May 25, 2022, the National Reconnaissance Office (NRO) awarded BlackSky a contract that covers next-generation photographic services based on existing and future satellite capabilities. The award shows the US government's commitment to using the capabilities of next-generation commercial providers to assist its most vital tasks.
• The Electro Optical Commercial Layer (EOCL) contract confirms BlackSky's high-visit constellation plan and marks a significant step forward in the NRO's cooperation with the company. It also serves as a crucial spur for BlackSky's satellite imaging services to be used in the long run.
• The contract has a five-year base period and five one-year options for extra services, with a total performance time of ten years. The award will begin in the second quarter of 2022 and will provide several chances for BlackSky to grow until 2032.
• BlackSky has one of the greatest dawn-to-dusk revisit rates over the world's most crucial locations thanks to a sophisticated SaaS customer platform and a 14-satellite constellation. The technology used by BlackSky allows for an average collection time of fewer than 90 minutes from the time a consumer places an order to the time the goods are delivered.
  

Important financial highlights from Q1 FY22 Financial result

• The first quarter of 2022 brought in USD 13.9 million in revenue, up to USD 6.6 million or 91% over the first quarter of 2021. Imagery and software analysis services revenue was USD 9.8 million, accounting for around 70% of overall sales, owing to growing demand from new and current government contracts. Engineering and systems integration income of USD 4.1 million also contributed to the rise in total revenues, owing to an increase in the percentage completion of some contracts.
• The first quarter of 2022 saw a 21.2 percent gross margin, down from 24.5 percent the previous year. Higher engineering and systems integration expenditures, owing mostly to non-recurring design costs and material procurement prices, were somewhat offset by a strong imaging and software analysis service margin of around 40%.
• The first quarter of 2022 saw a USD 27.1 million operating loss, compared to a USD 9.5 million operating loss in the first quarter of 2021. The rise in operating loss from the previous year was mostly due to greater operational expenditures, which were somewhat offset by an increase in gross profit.
• The first quarter of 2022 had an adjusted EBITDA loss of USD 9.5 million, compared to a USD 6.2 million loss in the prior-year period. Investments in sales, software, and engineering hiring, as well as public company operational expenditures, contributed to the year-over-year reduction.
• Cash and cash equivalents were USD 138.4 million as of March 31, 2022. The first quarter of 2022 saw USD 13.4 million in capital expenditures.

Stock recommendation

BKSY's stock price has fallen 70.80% in the past six months and is currently leaning toward the lower end of its 52-week range of USD 1.00 to USD 13.20. The National Reconnaissance Office’s contract has given the investors strong reasons to enter the BKSY stock, therefore price on the same day increased by 97.88% and closed at USD 2.34. The price made a high of USD 2.97 but closed below the range of USD 2.50 - USD 2.70, which is a very strong resistance for the price.

Given the stock's considerable bearish price movement over the past six months, financial results, technical analysis, and the recent news update about the government contract, we propose a "Watch" rating on the stock at its closing price of USD 2.34, as of May 25, 2022, with a further analysis incase the weekly candle closes above USD 2.70.

One Year Technical Chart, as of May 25, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Closing price as of May 25, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.