Investment bank Jefferies initiated coverage of BlackSky Technology (BKSY 3.43%) this morning, rating the space stock "buy" and predicting it would hit $23 within a year.
It actually took BlackSky 10 minutes. (The stock's retraced a bit, but still up 15% at 1 p.m. ET).
Image source: Getty Images.
Why Jefferies loves BlackSky stock
BlackSky hit the analyst's price target by 9:40 a.m. the same day the rating came out, the very definition of a self-fulfilling prophecy -- because there doesn't seem to be any other reason why the shares would be moving. Indeed, there's been no significant news about BlackSky since last week.
On Wednesday, the company said its third Gen-3 spy satellite is operational and generating revenue just three weeks after launch, "reflecting an exponential increase in commissioning speed since the launch of its first Gen-3 unit."
NYSE: BKSY
Key Data Points
Is BlackSky stock a buy?
What does this mean for BlackSky? In its note this morning, Jefferies argues that BlackSky's "refreshed" constellation of spy satellites could help it grow revenue 25% annually over the next few years, more than doubling sales from $102 million (today) to $211 million (by 2028).
Indeed, as StreetInsider.com reports, Jefferies believes BlackSky's new constellation could eventually support revenue as high as four times what BlackSky currently makes in a year, implying annual sales north of $400 million, and with earnings before interest, taxes, depreciation, and amortization (EBITDA) margins as high as 65% or more.
Granted, most analysts polled by S&P Global Market Intelligence believe it could take until 2031 or so for BlackSky to hit that mark, but Jefferies seems to be anticipating it will reach the goal sooner -- and even just $200 million in revenue would be enough to turn BlackSky stock profitable.
The time to buy BlackSky may have arrived.
