“Space is the place,” chanted cosmic jazz visionary Sun Ra, and almost half a century later the stock market has cottoned on with the space economy now offering new frontiers to explore.
And not only for Willian Shatner. Investors can get in on the action, too. Space companies have been hitching a ride on the SPAC craze with several going public this year; Surveying this landscape, Jefferies’ Greg Konrad thinks there’s an opportunity brewing in space infrastructure company Redwire (RDW).
“Redwire offers a diversified portfolio of space components that are well-positioned to capture emerging trends around a growing number of small sat launches and expansion into deep space exploration, as well as battle-tested products that provide a solid revenue base,” the analyst said.
The company’s “unique” selection of space offerings includes “highly engineered” components and spacecraft design, and the company is well positioned for the new space economy, boasting next-gen technology geared toward in-space manufacturing.
The company has been on a shopping spree and over the past two year has made seven acquisitions for a total $150 million. These have not only provided the company with a wide array of “innovative solutions” catering to the space market but have also reduced “competitive and market risk relative to single-product companies.” As such, over the next four years, Konrad expects revenue to grow at a 60% CAGR from a “base” of $153 million in 2021.
The diversified portfolio is “levered” to several catalysts which will support the growth. For one, the small sat market is poised to significantly expand; ~3,000 spacecraft launched during the previous ten years, but over 20,000 are expected to head into space over the next 10 years. Growth also gets support from an expanding launch market. Defense investments in space are ramping up, too, and over the past five years, budgets have increased by 135%, while NASA’s deep space exploration program is also seeing expansion.
“In addition,” says Konrad. “We view in-space manufacturing (Made In Space) as driving option value, with future applications tied to expanding human space travel and the ability to build and deploy things in space, with Redwire having first-mover advantage.”
Accordingly, the analyst rates RDW stock a Buy along with a $15 price target. This figure suggests room for 46% upside from current levels. (To watch Konrad’s track record, click here)
Redwire is still orbiting beneath Wall Street’s radar and Konrad’s review is currently the only one on record. (See RDW stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.