Buy Urthecast on weakness, says Clarus analyst Ofir

Clarus analyst Eyal Ofir believes the long term prospects for Urthecast have actually improved with Wednesday’s announcement that the company will build and install two additional sensors on the NASA segment of the ISS.
The selloff that came after Urthecast (TSX:UR) announced its high-res camera on the International Space Station would be delayed is a buying opportunity for investors with a longer time frame, says Clarus analyst Eyal Ofir.

On Wednesday, Urthecast announced that the biaxial pointing platform, which controls the pointing of its high-res camera, is experiencing difficulties and will face a “several-month delay”. Shares of the company fell more than 22% to close Thursday at $1.35.

Urthecast CEO Scott Larson looked to calm the market.

“Operations in space are complex and not always as predictable as many of us would like them to be,” he said. “Although the technical issues affecting the commissioning of the HRC have delayed our previously disclosed commissioning schedule, we believe these issues can be resolved and we do not expect that this delay will affect the viability of our product offering.”

Ofir says the selloff that came after Wednesday’s announcement presents an opportunity for existing and new investors. In a research update to clients yesterday, he was blunt in his assessment.

“The knee-jerk reaction in the share price to the HRC delay is short sighted and presents another buying opportunity for patient investors that are willing to take on the inherent volatility,” he said. Ofir maintained his “Speculative Buy” rating and $5.50 one-year target, implying a return of 316.7% at the time of publication.

Ofir says the level of detail and confidence with which management addressed the issue on a conference call yesterday gave him a lot of comfort. He believes the long term prospects for Urthecast have actually improved with Wednesday’s announcement that the company will build and install two additional sensors on the NASA segment of the ISS.

At press time, shares of Urthecast were up 1.5% to $1.37.