This analyst just raised his target on MDA Space to $88.00

Beacon Securities analyst Russell Stanley says MDA Space’s (MDA Space Stock Quote, Chart, News, Analysts, Financials TSX:MDA) planned acquisition of Collecte Localisation Satellites expands its addressable market and strengthens its European presence.

In a July 14 update, Stanley reiterated his “Buy” rating on MDA and raised his target to $88.00 from $80.00

MDA announced plans to acquire a 70% stake in CLS, a French provider of AI-driven Earth observation value-added services and satellite IoT solutions. CNES, the French space agency, will retain a 30% stake.

Stanley said the CLS acquisition, together with MDA’s planned acquisition of Blue Canyon, expands the company’s total addressable market by 15 times and brings pro forma annual revenue to about $2.5-billion.

CLS collects data from more than 400 satellites and other monitoring assets, using AI and advanced analytics to provide monitoring intelligence and forecasting services. It has more than 14,000 customers in about 150 countries.

The company is expected to generate fiscal 2026 revenue of $465-million, with Adjusted EBITDA margins in line with MDA’s 18% to 20% guidance range. Stanley said most of CLS’ revenue is recurring, with its top 20 clients staying with the company for an average of 18 years.

MDA will pay $920-million in cash for the stake. The price represents just under three times 2026 estimated sales and 15 times EBITDA. The deal is expected to close in late 2026 or early 2027.

Stanley said CLS fits MDA’s geographic expansion strategy and should improve its ability to compete for European opportunities. He said CNES’ continued minority ownership is important, given its role as a major contributor to the European Space Agency and its relationships with NASA, ESA, CSA, ISRO and other space agencies.

He also said CLS gives MDA downstream exposure in geointelligence by adding a buyer of the data MDA already produces. With limited customer overlap, Stanley sees meaningful cross-selling potential, including for MDA’s CHORUS satellite constellation, which is expected to launch before year-end.

MDA closed a US$819-million bought deal financing at US$35.60 per share, or about $50.45. Stanley assumes full exercise of the overallotment, which would take gross proceeds to more than $1.3-billion. Proceeds will help fund the CLS acquisition and may be used to repay some CLS debt.

Stanley raised his fiscal 2027 Adjusted EBITDA forecast to $562-million from $452-million and increased his valuation multiple to 28 times from 27 times, citing the larger market opportunity and European footprint.

MDA trades at 15 times Stanley’s new fiscal 2027 Adjusted EBITDA forecast, a 71% discount to Intuitive Machines and a 94% discount to Redwire.

Stanley expects MDA to generate Adjusted EBITDA of $343-million on revenue of $1.80-billion in fiscal 2026, improving to Adjusted EBITDA of $562-million on revenue of $2.82-billion in fiscal 2027.

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