Down 55% over the past 12 months, satellite imaging specialist DigitalGlobe (DGI) is having another bad day here on Friday -- and you can thank a Wall Street analyst for that.

The news
Earlier this morning, Chardan Capital Markets announced a big downgrade on the eye-in-the-sky satellite company, cutting DigitalGlobe from buy to neutral, and reducing its estimate for 2016 sales and profits as well.

According to Chardan, DigitalGlobe has failed to grow its U.S. revenue "for many quarters."

Data from S&P Global Market Intelligence confirm this fact, showing that U.S.-sourced revenue at DigitalGlobe declined from $130 million in Q4 of 2014 to $128 million in Q1 of 2015, then fell further to $126 million, then $123 million, in subsequent quarters. (International revenue has fluctuated -- down, up, down -- over the same period). Seeing a trend in this data, Chardan cut its estimates for DigitalGlobe's 2016 revenues from $704 million to just $686 million, and removed its buy rating from the stock.

On the face of it, that looks like a logical decision -- albeit an unhappy one for DigitalGlobe investors, who are watching their stock sink 7.5% in response to the downgrade. But before deciding to abandon all hope, here are a few more things you should know about Chardan's downgrade.

DigitalGlobe's images have multiple uses -- such as tracking the condition of shipping operations in ports such as Cape Town, South Africa. Image source: DigitalGlobe.

Thing 1: Revenue is down...sort of
Chardan's 100% right about DigitalGlobe's revenue sinking -- sequentially. But if you compare the numbers DigitalGlobe's been putting up over the past year, to its prior-year performance, year-over-year revenue growth (the more common way of measuring revenue growth) in the U.S. is still positive -- and indeed averaged about 15% over the past three quarters.

A more worrisome concern, though, is that overall revenue growth, considering both U.S. and international sales, shows revenue growing slower than in the U.S. -- 8% in Q1, 13% in Q2, and just 12% in Q3.

So in fact, Chardan appears to be both wrong and right about its revenue concerns.

Thing 2: Commercial success has been elusive
Geography aside, Chardan says its "biggest disappointment" with DigitalGlobe is the fact that if you back out purchases of satellite images by governments, sales to commercial clients have been even weaker, falling three years in a row, and down about 14% this year from 2013 levels.

Chardan attributes this to rising competition from low-end providers of digital imaging, and DigitalGlobe's inability to break into new markets and increase sales volumes of its images.

That's a curious development, seeing as DigitalGlobe bought its primary competitor, Motley Fool recommended stock GeoEye, back in 2013. According to data from S&P Global, the company's biggest competition still remaining comes from much larger firms with much more diverse businesses -- Airbus (EADSY -0.05%) and Orbital ATK (OA), neither of which one would think is spending a lot of time or effort trying to beat DigitalGlobe.

Broadly defined, "Space" represents less than 21% of the revenue Airbus collects in a year. Orbital ATK, in contrast, is a space firm. But even at Orbital ATK, "space systems" such as satellites account for just 13% of annual revenue.

And yet, DigitalGlobe is losing anyway.

Thing 3: DigitalGlobe looks cheap...maybe
All this being said, Chardan Capital still isn't throwing in the towel on DigitalGlobe entirely. Reducing its rating only to neutral, Chardan says the stock is generating lots of cash, and its valuation looks favorable.

With $166 million in trailing free cash flow, and an enterprise value-to-free-cash-flow ratio of just 12, I can't really disagree with that assessment. Except for... more thing
Most analysts who follow DigitalGlobe agree at least in part with Chardan's assessment. Now, this analyst doesn't have a great record on Motley Fool CAPS, where we've been scoring its stock picks for the past four years. (According to our stats, Chardan actually ranks in the bottom fifth of all investors we track.) But Chardan may still be broadly correct about this call.

Here's why: Chardan's assessment of DigitalGlobe's declining business may be overly pessimistic. Still, other analysts who follow the stock are forecasting profits growth of only 8.5%. With no dividend to support the stock, and an EV/FCF ratio of 12, 8.5% growth is probably too little to make DigitalGlobe stock worth buying -- even after Friday's steep fall in stock price.

I'd also point out that although DigitalGlobe's $166 million in free cash flow produced over the past 12 months is admirable, it's also a bit of an outlier. Over the past five years, the company has instead actually burned cash (negative free cash flow of $192 million). And last year's positive free cash flow was a rebound from two straight years of burning cash. Accordingly, I'd take the most recent FCF number with a couple grains of salt.

And like Chardan Capital -- I'd stay away from DigitalGlobe stock.