MDA Space’s valuation still “compelling”, this analyst says

Beacon Securities analyst Russell Stanley says MDA Space’s (MDA Space Stock Quote, Chart, News, Analysts, Financials TSX:MDA) new defence satellite product adds to the company’s expanding defence opportunity.

Stanley reiterated his “Buy” rating and street-high $88.00 target on MDA in his Sept. 10 update.

MDA announced AURORA BLACK, a software-defined satellite product designed for government and military customers.

The product adds secure end-to-end connections, onboard anti-jamming, resistance to GPS spoofing, and perimeter and proximity sensing.

The launch follows several steps by MDA to expand its defence addressable market. The company introduced MDA MIDNIGHT in April, a maneuverable spacecraft aimed at the bodyguard satellite market.

In June, MDA announced plans to acquire Blue Canyon Technologies from RTX for $874-million in cash. Stanley said the deal, expected to close late this year, should improve MDA’s ability to pursue U.S. defence opportunities.

Blue Canyon is a Colorado-based spacecraft and satellite component manufacturer, with defence contributing about 75% of revenue.

Stanley said MDA’s sales pipeline doubled year-over-year to $40-billion in March, with defence contributing some of the larger opportunities.

MDA also recently launched a program to support Canadian small and medium-sized businesses developing space technologies for the Canadian Armed Forces and allied forces.

Stanley said the stock trades at 14 times his fiscal 2027 Adjusted EBITDA forecast, a large discount to space peers Intuitive Machines and Redwire.

The analyst said MDA has generated positive EBITDA and EPS every year since its 2021 IPO, while consensus does not expect Redwire to turn EBITDA positive until next year or Intuitive Machines to become EPS positive before fiscal 2028.

Stanley also said the recent recovery in SpaceX shares is constructive for space stocks more broadly.

“We view its improved technical picture favourably, with MDA’s compelling valuation justifying renewed outperformance,” Stanley said.

Potential catalysts include contract wins, Q3 results in November, progress toward closing the Blue Canyon and CLS acquisitions, and tuck-in deals.

Stanley expects MDA to generate Adjusted EBITDA of $347-million on revenue of $1.83-billion in fiscal 2026, improving to Adjusted EBITDA of $562-million on revenue of $2.84-billion in fiscal 2027.

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