Google’s acquisition of Skybox is validation for Urthecast, says Clarus

The acquisition of Urthecast’s closest comparable, Skybox, by Google validates the business model of Canada’s Urthecast (TSX:UR), says Clarus Securities analyst Eyal Ofir.

On Tuesday, Google announced it was acquiring satellite imaging startup Skybox Imaging for $500 million in cash. The tech giant said it hoped the firm could ultimately help provide better internet access and aid in disaster relief efforts.

Ofir says he believes this pickup supports UrtheCast’s longer term plan that anticipates consumer demand for satellite imagery beyond the traditional Earth Observation market. While one could regard Google as a competitor, he says, it is not known whether Google plans to support corporate and government demand for satellite imaging services, an area the analyst believes is one Urthecast could potentially corner.

Ofir says the uncertainty in the Ukraine and commissioning delays have impacted Urthecast’s stock and presented an attractive entry point for investors. He says there a several upcoming potential catalysts, including the impending commercial availability of its Medium Resolution Camera and the upcoming release of its Ultra HD video camera. The Clarus anlaysts says that once the latter is commissioned, Urthecast could be an attractive takeout candidate for internet companies such as Facebook, Yahoo!, or Baidu.

In a research update to clients yesterday, Ofir maintained his “Speculative Buy” rating and $5.50 one-year target price on Urthecast, implying a 274.1% return at the time of publication.

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