Clarus analyst Eyal Ofir says he is gaining confidence in the value proposition of newly-listed Urthecast (TSXV:UR), which has been a high flyer of late.
Ofir, who in September initiated coverage of Urthecast with a Speculative Buy rating and a $3.00 one-year price target, recently attended the company’s analyst day in Vancouver and says the time he spent with management provided him with an increasing level of comfort about how big Urthecast could be, if things go according to plan.
Urthcast, which was founded in 2010, went public earlier this year, recently signed a decade long agreement with Russian aerospace company RSC Energia to place two high-def cameras on the International Space Station.
Although he reiterated his initiation target price and rating in an update to clients yesterday, Ofir says that once these best-in-class cameras are installed and imagery data begins to stream back to earth, he believes investors will wake up to the potential of the company and the myriad of end markets it can serve. The Clarus analyst says his scenario analysis would take his target price to $4.65 per share under a $75 million revenue scenario and up to $7.65 per share under a $125 million revenue scenario.
Ofir notes that while Urthecast has signed eight distributors in seven countries to date, the company has simply disclosed the minimum annual quotas through these arrangement, which totals $19-million annually. But the revenue potential in this arrangement is actually more than $100-million a year, and that just for the traditional Earth Observation market, he says. Opportunities beyond this traditional market, says Ofir, are substantial, with the company initially targeting media and broadcast clients.
Shares of Urthecast closed today down 2.5% to $1.95.