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H.C. Wainwright analyst Scott Buck upped his price target on BlackSky stock by 40% this morning.
Demand for spy satellite images is rocketing higher, and Buck foresees strong revenue growth ahead.
BlackSky stock remains years away from profitability, however.
BlackSky Technology (NYSE: BKSY), the Earth imaging spy satellite company, scored a price target hike from H.C. Wainwright analyst Scott Buck today, as StreetInsider.com reports. Maintaining a buy rating on the space stock, Buck raised his price target on the shares by 40%, to $28.
Image source: Getty Images.
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With 2025 just half over, BlackSky stock has already doubled year to date, a fact Wainwright's Buck attributes to "expectations for increasing demand [for spy satellite images], given the deployment of the company's Gen-3 satellites and increasing geopolitical tensions."
How much demand? Buck predicts revenue will grow 29% in 2025, up dramatically from single-digit growth in 2024, helped by higher defense spending coming from NATO countries. Buck notes that BlackSky already earns 70% or better gross profit margins, so if the company can just apply those margins to more revenue, its net profits should increase dramatically.
Not everyone's so sanguine on BlackSky's prospects. According to data from S&P Global Market Intelligence, most analysts think it will be 2028 before BlackSky is able to deliver consistent profits -- even if revenue grows as briskly as Wainwright is projecting.
Free cash flow could turn positive sooner than that -- 2027, according to the projections. And by 2028, the company might generate cash profits in the neighborhood of $30 million, putting its price-to-free cash flow ratio in the low-20s.
Still, that's three years in the future. As much as I love space stocks, at its present market capitalization of $700 million, and with a price-to-sales ratio of nearly 5x, BlackSky stock looks a bit too expensive for my taste. I'd want to see a significant pullback in price before buying into this one.
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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.
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