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Planet Labs just signed a large contract with Sweden.
Its price target was upgraded by Wedbush.
The stock is soaring but now trades at a premium.
Shares of Planet Labs (NYSE: PL) jumped 24.5% this week -- as of this writing before the market open on Friday, Jan. 16 -- according to data from S&P Global Market Intelligence. Planet Labs operates a satellite constellation that sells imaging services to governments and commercial enterprises, and it has just won another deal with Sweden. Plus, a Wall Street analyst upgraded the stock.
Planet Labs' stock is up over 600% in the past year. Here's why the stock is up yet again this week.
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Satellite imaging services are a growing trend for both military and commercial use cases. Planet Labs has a satellite constellation custom-built to serve these needs, performing daily global high-resolution imaging from space to monitor assets such as ports, infrastructure, and military bases.
Countries are lining up to sign contracts with the company. This week, Planet Labs signed a contract with Sweden worth over $100 million for imaging services for its military, with payments to be made over multiple years. Signing contracts with these governments is why Planet Labs' backlog grew over 200% last quarter to $734 million. Investors are excited about the financial potential for these long-term government deals.
Even more excitement comes from the new project with Alphabet called Project Suncatcher, which is exploring how to build artificial intelligence (AI) data centers in space. With all this positive news, Wedbush upgraded its Planet Labs price target from $20 to $28, leading the stock to jump even further this week.
Image source: Getty Images.
After this week's boost, Planet Labs has a market cap of around $9 billion. It is now cash flow positive, with free cash flow of $35 million over the last twelve months.
However, if we look at Planet Labs revenue, it is much smaller than its current market cap. Revenue was $282 million over the last twelve months, giving the stock a trailing price-to-sales ratio (P/S) of 32. This may be a fast-growing business, but it is trading at a high price today. Keep Planet Labs stock on the watchlist for now.
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