Buy MDA (TSX:MDA) for a double, this analyst says

MDA Space (MDA Space Stock Quote, Chart, News, Analysts, Financials TSX:MDA) reported third-quarter revenue and earnings above the highest analyst estimates, driven by stronger-than-expected satellite manufacturing activity, including work on Telesat’s Lightspeed constellation.

Beacon Securities analyst Russell Stanley maintained his “Buy” rating and $88.00 target on the Brampton, Ont.-based space technology company, saying the results, pending acquisitions and potential share repurchases support his positive outlook.

MDA reported quarterly revenue of $498-million, up 22% year-over-year and ahead of the highest Street estimate of $463-million. Adjusted EBITDA reached $96-million, exceeding the highest estimate of $88-million, while adjusted earnings of $0.37 per share beat expectations of $0.31.

“Revenue beat our forecast by 17%, improving 22% y/y and holding steady from what was a strong Q2,” Stanley wrote in his Nov. 6 report. “The beat can be attributed primarily to Satellite Systems, where revenue beat our forecast by 26%, increasing 26% y/y and 7% q/q on stronger-than-expected execution, particularly on the Lightspeed LEO constellation for Telesat.”

Satellite Systems generated $358-million in revenue, compared with Stanley’s $284-million forecast. Operating cash flow reached $106-million, exceeding his $72-million estimate, while free cash flow of $62-million substantially beat his $17-million forecast.

MDA also increased its fiscal 2026 guidance, raising its revenue outlook to $1.90-billion to $1.95-billion from $1.8-billion to $1.9-billion. Adjusted EBITDA guidance increased to $355-million to $375-million from $330-million to $370-million.

Stanley thinks the company’s pending acquisitions of Blue Canyon Technologies (BCT) in the United States and a 70% interest in French satellite services company CLS could lead to further increases in analysts’ forecasts. “As we believe at least a few of our peers have yet to reflect the BCT/CLS acquisitions in the estimates reported by FactSet, and those acquisitions represent ~$690M in F2026E revenue, we expect upward estimate revisions to headline consensus upon closing,” he said.

The transactions are expected to close by year-end or early January and would expand MDA’s presence in satellite manufacturing and geospatial services.

Stanley also sees potential for share repurchases. MDA received Toronto Stock Exchange approval in September to buy back up to 8.1 million shares, representing approximately 5% of shares outstanding. He estimates the company will have more than $1.1-billion in available liquidity after completing the acquisitions, including its revolving credit facility.

“The company has already obtained approval for an NCIB, and has the balance sheet flex to be active on it, even net of its pending acquisitions,” Stanley said.

MDA ended the quarter with an order backlog of approximately $4-billion, including $1.4-billion associated with Telesat’s Lightspeed program, providing revenue visibility through 2029.

Stanley raised his fiscal 2026 revenue forecast to $1.92-billion from $1.83-billion and his Adjusted EBITDA estimate to $367-million from $347-million. For fiscal 2027, he increased his revenue estimate to $2.88-billion from $2.84-billion and his Adjusted EBITDA forecast to $565-million from $562-million. He introduced fiscal 2028 forecasts of $3.21-billion in revenue and $636-million in Adjusted EBITDA.

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