Satellite company boosted by contract worth 10-times its market cap

Canaccord believes industrial-scale production of smallsats will be in high demand over the next decade

Shares of this spacecraft builder jumped on Wednesday after the company announced it was awarded a $2.4B contract to design and build communications satellites for Rivada Space Networks, a deal that Jefferies calls “a massive opportunity.” The firm also noted that the award’s value is about 10 times the company’s current market cap and more than 10 times its current backlog of $198M.

“a massive opportunity,” Jefferies noted that the award’s value is about 10 times the company’s current market cap and more than 10 times its current backlog of $198M. Assuming that the revenues tied to the deal are roughly split in 2025 and 2026, a $1.2B revenue estimate for each year compares to the firm’s and consensus’ current 2026 revenue estimate of $1B, noted the analyst. Jefferies has a Buy rating on the shares with a price target of $10 price target.

“MASSIVE” ORDER: Also commenting on the news, Canaccord highlighted that the deal is a "massive order" that includes 288 active LEO comsats and 12 orbital spares with a mass of about 500 kg. The firm believes the contract is "particularly notable" in that it is the largest smallsat production contract ever awarded and is comparable in size to the entire Space Force SDA annual budget. It is very likely that Terran’s successful delivery of the ten SDA Transport Layer Tranche 0 satellites on time in 2022 played a major role in the company’s selection by Rivada, Canaccord adds.

Overall, the firm believes the "huge" satellite production contract further substantiates its view that industrial-scale production of smallsats will be in high demand over the next decade. The firm has a Buy rating on the shares with a price target of $15.

PRICE ACTION: In Wednesday morning trading, shares of Terran Orbital have gained about 57% to $2.69.

Keywords: space, satellites, smallsat