There may be money to be made off of Maxar Technologies’ (Maxar Technologies Stock Quote, Chart TSX:MAXR) dizzying descent over the past six months but you might want to wait a bit longer until the dust settles, says Benj Gallander, president of Contra The Heard Investment Letter, who says he’s keeping an eye on the stock.
Maxar’s share price has fallen from the $60 range as of last August to less than $10 now, with a number of factors coming into play. Specifically, the company experienced a write down in its satellite business last fall, while also taking the brunt of a short-seller attack alleging questionable accounting practices.
Then, last month, management broke the news that of a permanent technical failure in an image-generating satellite, which the company says will take tens of millions out of its revenue stream. Add to that list a nagging debt load and the sudden departure of its CEO and you have a recipe for disaster.
Will the former MacDonald, Dettwiler and Associates bounce back? Gallander says that it’s too early to tell, but there may be a ripe opportunity for contrarian investors coming up.
Maxar went on the stock watch list about three weeks ago. It’s another great Canadian company that’s having all kinds of difficulties,” says Gallander to BNN Bloomberg on Tuesday. “They have a debt load, they have the one satellite that appears to have imploded and it’s going to hit revenues pretty badly.”
“Once I ‘discover’ a company and put it on the watch list, I will not buy into it until at least six months later, often it’s three or four years,” he says. “The first time I could buy it using my system is towards the end of the year, maybe when tax loss season is on.”
“I don’t know if the price will have come back much more but at that point the stock could be at a higher price but still be a better buy in terms of risk/reward because some of the risk might have come off, it may have better reward possibilities. It’s a very contrarian play, which is up my alley, but it’s too early,” he says.
Ahead of Maxar’s fourth quarter financials arriving on February 28, the company last reported on October 31, posting a net loss of $432.5 million on a top line of $508.2 million, with Maxar’s GEO Communications segment showing a 31-per-cent year-over-year decline in revenue.