Shares of BlackSky Technology (NYSE: BKSY), one of the leading providers of digital satellite photos of Earth from space, rocketed 18.9% through 12:35 p.m. ET Thursday on a couple of positive developments.
On Tuesday, BlackSky announced the National Geospatial-Intelligence Agency (NGA) awarded the company a $24 million, four-year contract to perform global monitoring of military and economic facilities.
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Two days later — today — Canaccord Genuity analyst Austin Moeller responded by raising his price target on BlackSky stock from $14 to $20 per share.
Image source: Getty Images.
BlackSky’s big contract
Let’s start with the NGA contract. Technically a “delivery order” under a much larger umbrella contract awarded last year, this “Luno A Facility Operational Monitoring” contract hires BlackSky to “perform AI-enabled object and pattern-of-life change detection to monitor trends and anomalies in vehicle, aircraft, vessel, railcar, and ground equipment activity at military and economic facilities worldwide, including ports, airfields, military installations, and railways.”
So it’s basically it’s a spy satellite contract.
It’s also worth an additional $6 million a year to BlackSky, with the potential to grow even bigger over time, as more delivery orders under the original umbrella contract roll in.
Is BlackSky stock a buy?
But is this development big enough to justify adding more than $100 million to BlackSky’s market capitalization today? I doubt it.
BlackSky stock has already more than doubled over the past year. Yet revenues are up less than 10%, the company’s still burning cash, and it’s still losing about $54 million a year. Analysts polled by S&P Global Market Intelligence don’t expect BlackSky to earn its first profit before 2028 at the earliest.
While $20 a share may not sound like much today, I’m afraid BlackSky stock is still too expensive to buy.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
