Desjardins Securities analyst Benoit Poirier sees MDA Space Ltd. “primed to attract investor interest, offering what we see as an asymmetric pure-play bet with limited downside.”
“While anticipation was high heading into the print given the share price appreciation, the noise surrounding Apple’s new constellation, and expectations of a beat and raise, MDA’s stronger-than-expected deleveraging was a positive surprise, in our view,” he said. “We continue to believe the new Apple-Globalstar constellation is behind MDA’s mysterious ATP contract. These results and the slight CHORUS delay have not changed our thesis and we have made only small tweaks to our numbers.”
Shares of the Brampton, Ont.-based space technology company slipped 3.4 per cent on Friday despite the release of third-quarter results that were better than anticipated. Revenue grew 38 per cent year-over-year to $282-million, exceeding the $277-million estimate of both Mr. Poirier and the consensus of his peers and above its guidance range of $270-$280-million. Adjusted EBITDA of $56-million and adjusted earnings per share of 28 cents also topped the projections of the analyst ($55-million and 26 cents, respectively) and Street ($54-milllion and 17 cents).
“MDA raises revenue target and narrows EBITDA range—CHORUS launch date delayed to mid-2026 and LEO booking pipeline increased to $15-billion-plus,” said Mr. Poirier.
“MDA’s LEO satellite constellation booking pipeline opportunity has increased to $15-billion-plus (from $13-billion previously) based on new customer conversations. MDA now has at least several items in the pipeline that are in more mature phases, with at least one new constellation announcement expected in 2025. The one hiccup in the quarter was that MDA has delayed the launch of CHORUS to mid-2026 (from 4Q25 originally) given additional technical work and security features. According to MDA, this will have no material impact on revenue targets for 2026 or be a material working capital drag. We now forecast adjusted EBITDA of $207-milllion in 2024, followed by $272-million in 2025 and $330-million in 2026 ($204-milllion, $273-million and $328-million previously).”
Also seeing stronger-than-expected deleveraging, Mr. Poirier raised his target for MDA shares to $31 from $26, keeping a “buy” rating, after raising his forecast through 2026. The average is $25.13.
Elsewhere, others making changes include:
* RBC Capital Markets’ Ken Herbert to $28 from $25 with an “outperform” rating.
“We can appreciate some profit taking in the stock [Friday], with the stock still up 115 per cent year-to-date,” he said. “We see very limited risk to MDA from potential cost savings in the U.S. gov’t under Pres. Trump. We do see incremental support for space under Trump 2.0, but MDA could face potential headline risk around potential NASA restructuring. However, we believe the valuation remains attractive, that the initial 2025 guidance will be a positive catalyst, and incremental contract awards should also support continued multiple expansion.”
* Canaccord Genuity’s Doug Taylor to $30 from $27 with a “buy” rating.
“MDA’s rise, in terms of revenue, profitability, balance sheet strength, and overall sentiment, continued in Q3 with a positive near-term outlook. Valuation has expanded to a level more representative of the growth profile at 13.0 times NTM [next 12-month] EBITDA. This is by no means stretched, in our view. With a high degree of visibility into 2025 and 2026 growth, we believe the lens will quickly shift forward. We elect to publish our initial 2026 estimates calling for another 20-per-cent growth on top of next year’s 30 per cent. Based on the associated EBITDA growth, MDA trades at just 9.6 times 2026, suggesting further share price upside if the company is successful in executing on the LEO ramp and backfilling some of its backlog over the course of 2025. On that basis, we maintain a positive stance on the name,” said Mr. Taylor.
* Scotia’s Konark Gupta to $29 from $25 with a “sector outperform” rating.
“We are not surprised by a negative market reaction [Friday], considering the stock had exceptionally outperformed lately,” he said. “Although a slight delay in CHORUS launch could be a sell-off factor, management doesn’t expect major impact on capex or revenue. Overall, MDA remains on track to consistently grow at 25-30-per-cent CAGR with 19-20-per-cent margins while rapidly moving toward net cash (ex-leases) with significant cash windfall from the Telesat contract. We recommend building a long-term position in MDA, taking advantage of pullback, to benefit from potential 100-200-per-cent EBITDA growth over the next five years as the company expands satellite manufacturing capacity to 400/year, potentially generating $2.0-billion-plus revenue annually from the Satellite Systems segment alone.”