What BofA's Underperform Rating Means for Redwire (RDW) Investors

Redwire Corp. (NYSE:RDW) is one of the best emerging technology stocks to buy right now. The company develops space infrastructure technologies, including deployable structures, satellite power systems, and in-orbit manufacturing. The company has also advanced research in 3D bioprinting in microgravity, highlighting its role in the growing space economy.

Despite these strengths, Redwire Corp. (NYSE:RDW) shares have fallen 47% year-to-date. Analysts see potential for recovery and the broader consensus suggests over 100% potential upside for the stock. However, questions surrounding growth visibility and shareholder actions have added caution.

On August 18, Bank of America analyst Ronald Epstein started coverage of Redwire Corp. (NYSE:RDW) with an Underperform rating and a $10 price target. He cautioned that the company relies heavily on government space contracts, which limit its growth potential. Epstein also flagged earnings volatility, dependence on acquisitions, and its concentrated ownership as added risks compared to other space and defense tech peers.

Among the key concerns for Epstein is Redwire’s ownership structure. Following the Edge Autonomy deal and a capital raise, two private equity firms now collectively hold approximately 87% of the company’s shares. These investors have also signaled plans to sell a large chunk of their stake, reportedly over 75%, in the future. According to Epstein, such heavy insider selling could weigh on the stock price and make it harder for Redwire Corp. (NYSE:RDW) to raise new funds, adding further uncertainty for investors.

Redwire Corp. (NYSE:RDW) supplies space infrastructure and high-reliability components for the emerging space economy. The company holds key intellectual property in areas such as solar power systems and in-space 3D printing and manufacturing.

While we acknowledge the potential of RDW as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: Best Stocks For Day Trading: 12 Stock Picks and 15 Best Multibagger Stocks to Invest in Right Now.

Disclosure: None. This article is originally published at Insider Monkey.