MDA Space Ltd.
MDA completes Preliminary Design Review with Telesat, a key program milestone
TSX: MDA | CAD 27.69 | Outperform | Price Target CAD 30.00
Sentiment: Positive
MDA Space (MDA) and Telesat have completed a key milestone for the Telesat Lightspeed constellation. This morning, it was announced that Telesat and MDA Space have completed the spacecraft Preliminary Design Review, marking a key milestone in the Telesat Lightspeed low Earth orbit (LEO) constellation program. The completion of the PDR demonstrates maturity in the design to meet the program's performance requirements, with PDRs for multiple key subsystems having also been completed. Telesat and MDA Space are now transitioning to the program's detailed engineering and manufacturing phase, including the Critical Design Review. Telesat selected MDA Space as the prime satellite contractor for the constellation in 2023, awarding an initial order of 198 satellites, and Telesat plans to begin launching satellites in 2026.
MDA Space looks to double satellite manufacturing capacity in its Quebec facility. Earlier this year, MDA Space began adding capacity to double its satellite manufacturing capacity in its Quebec facility, where the program's satellites will be produced. The company is aiming to be able to deliver 2 satellites/day exiting 2025. The new facility expansion is expected to be operational in 2H25. Note that the LEO satellites that MDA is building for Telesat are likely to have roughly ~80% commonality across other future awards for LEO satellites as the company focuses on "productizing" its Aurora satellite line. We model Telesat to contribute ~$180M of revenue in 2024, $500M in 2025, and over $700M in 2026. Next week, we will be attending a site visit tour at the company's Montreal facility and hope to provide an update on the progress made there as well.
We recently hosted MDA's management team for a day of investor meetings. Coming out of the meetings, we believe investors were focused on the 2025 outlook, and with the completion of the preliminary design review, we expect incremental investor confidence heading into next year on the Telesat contract. Although the company did not provide further details about their unnamed customer for the ATP contract, management remained confident about receiving the remaining ~$450M of the contract before year-end. Receiving the remainder of this award would push the backlog to ~$5B by year-end. We continue to believe that incremental contract awards remain positive catalysts for the stock with investors increasingly focused on the 2026–28 revenue outlook.