Terran Orbital (NYSE:LLAP) Corporation has earned a repeat ‘Buy’ rating and price target of US$15, representing a significant upside from the company’s current share price of US$2.37, from analysts at Canaccord Genuity (TSX:CF, LSE:CF) following the news that a major early investor in the company Beach Point Capital Management has sold off an additional 800,000 shares of the stock.
In a note to clients, the analysts said that they viewed this as generally positive for the stock, as the selling pressure from Beach Point often seemed to create a negative perception in the market among other investors they had spoken with. However, Beach Point, now owns less than 10% of Terran's shares (holding roughly 14.1 million).
They pointed out that Beach Point’s reduction of its equity stake likely has more to do with the mandates of the fund itself and, in their view, did not actually have any bearing on the fundamentals of Terran Orbital (NYSE:LLAP) as a public company.
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“We view the management team at Terran as being among the most rock solid in the New Space sector, as is evidenced by the company successfully capturing a $2.4B commercial mega-constellation contract to produce 300 satellites for Rivada Space Networks just last week,” the analysts wrote.
“Rivada is backed by heavyweight investors like Peter Thiel, with the company’s CEO, Declan Ganley declaring to SpaceNews last week that the company has full ‘funding commitments’ from its shareholders to fund the manufacturing and launch of the satellites.”
The analysts highlighted that under the terms of the Rivada contract, Terran Orbital must deliver 144 of the “Phase One” satellites by 1Q 2026, with the rest of the 300-unit block to be delivered by 2Q 2026 and the option to construct an additional 330 “Phase Two” satellites.
“This continues to build on the company’s existing backlog, which includes Lockheed Martin (NYSE:LMT)’s portion of the SDA Transport Layer, with the company working to deliver 42 new Tranche 1 satellites to the prime in advance of their projected September 2024 launch,” they wrote.
“Given Terran’s current factory production capacity of about 250 smallsats per year, we expect more commercial and government constellation operators to come knocking before the end of the year.”
Canaccord’s analysts also noted that, with management reaffirming that the company’s robotic manufacturing space in Irvine, California, is complete and meets its current needs, Terran Orbital is focused on leasing some additional property nearby for more satellite assembly space.
“This would allow them to produce larger satellites potentially up to a 1,000 kg mass class. However, the company has sufficient capital to prepare add-on assembly areas.”
They concluded: “It is possible that the company could win another constellation for many hundreds or over a thousand satellites from a government or commercial customer that would require supplemental manufacturing facilities, but this would be a good problem to have.”
Contact the author at emily.jarvie@proactiveinvestors.com
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