Wells Fargo has named space companies Maxar Technologies and Rocket Lab as two stocks that investors should buy in the developed industry. The firm’s Matthew Akers began coverage of both stocks with overweight ratings, highlighting the companies as standouts in the pure-play space sector — many of which recently went public amid the SPAC boom, with valuations only in the past year. To see a decline in Virgin Galactic Holdings, arguably the best-known name in the group, was rated a new underweight, with Akers giving it an opening price target of $4, or 36% below Friday’s close. Maxar Acres gave Maxar stock a $39 price target, up 55% from its latest close, calling the company an “established leader in satellite Earth imaging, with a potential boom in space infrastructure.” Maxar’s recent NRO contract win, which is valued at $3.2 billion, frees the company’s satellite imagery business from “risk,” Akers wrote. Despite the delay in the launch of its World View Legion satellites, Acers says Maxar’s more advanced spacecraft will “provide a catalyst and expand its lead” in the market for high-resolution imagery. Acers noted “increased competition” from other satellite imagery companies such as Planet Labs and BlackSky, but he thinks the NRO deal shows Maxar can “hold on to a leading market share position.” Rocket Lab Acres began coverage of small satellite specialist Rocket Lab with a $5 price target, or 20% above the stock’s current price. The company manufactures both small rockets and satellites, and is an “early leader” with “a higher achievable growth forecast than its peers.” “We think the valuation is settling even after the 2020-21 SPAC boom, while its long-term outlook for 30%+ margins remains to be proven,” Akers said. The company’s Electron series of rockets represents the second most active US launch vehicle behind SpaceX’s Falcon 9 rocket, and Rocket Lab is building a space services business that “could finally provide the upside.” “RKLB has indicated that it will eventually evolve into space-based services, vertically integrated from satellite production and launch services that it will sell to end customers,” Akers wrote. While Rocket Lab is “still a few years out” from even cracking down on cashflow, Wells expects the company to reach that benchmark “sooner than many” of its peers in the recent public space stock group. — CNBC’s Michael Bloom contributed to this report.
