Maxar Technologies stock is too risky right now, says this portfolio manager

Formerly known as MacDonald, Dettwiler and Associates, Maxar Technologies saw its share price drop further in trading on Monday as the company continues to reel from a couple of body blows over recent weeks involving a stability failure in its WorldView-4 satellite and the abrupt stepping down of CEO Howard Lance. Those events come after a 2018 in which Maxar fought a short-seller attack, wrote down its satellite business and suffered a dramatic plunge in its share price.

All of which is to say that the stock remains particularly volatile right now, says Stuchberry, portfolio manager at Wellington-Altus.

“We owned this about a year ago and got more or less stopped out that the news wasn’t good and the stock wasn’t going in the proper direction, so we basically surrendered and sold the stock,” says Stuchberry, in conversation with BNN Bloomberg Monday.

“I think on this one, unless you’re going to trade it, let the thing form a base for you and go sideways for a while and show that the problems that it has faced in the past few months are behind you,” he says.

MAXR was drifting lower over the first half of 2018 before an earnings miss in late July sparked a selloff that basically continues to this day. To date, the stock has lost 92 per cent of its value since the start of 2018.

“They have to iron these problems out and once that’s done then maybe they can recover again,” says Stuchberry. “The stocks in this sector do have a volatility background to them.”

Launched two years ago, Maxar says that its image-generating satellite’s failure will knock $85 million in annual revenue off of its books, with the company intending to seek a full recovery for the losses through insurance claims.