Missile Defense Modernization And Commercial Space Stations Will Shape A Balanced Long Term Outlook

Catalysts

About Voyager Technologies

Voyager Technologies develops advanced defense, national security and commercial space systems across propulsion, sensing, communications and orbital infrastructure.

What are the underlying business or industry changes driving this perspective?

• Although Golden Dome and NGI position Voyager at the center of modern missile defense architectures, any budget reprioritization or program delay in these long-cycle initiatives could cap the pace of revenue growth and limit operating leverage.
• While falling launch costs and the shift toward LEO constellations increase demand for electric propulsion and secure communications, intensifying competition and potential commoditization of satellite subsystems may pressure pricing power and constrain gross margins.
• Despite Starlab being aligned with the transition from the ISS to commercial space stations, slippage in NASA milestone schedules, CLD Phase II awards or JV fundraising could push out the anticipated multi billion dollar revenue ramp and defer free cash flow inflection.
• Although recent acquisitions in radar analytics, optical communications and electric propulsion are immediately margin accretive, integration complexity and execution risk around cross selling into defense and space platforms could delay expected revenue synergies and slow EBITDA improvement.
• While Voyager benefits from sustained national security spending and a large qualified opportunity pipeline, execution missteps in scaling production, talent integration or program delivery may limit backlog conversion into higher earnings and delay the path to sustainable net margins.

Assumptions

This narrative explores a more pessimistic perspective on Voyager Technologies compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming Voyager Technologies's revenue will grow by 40.3% annually over the next 3 years.
• The bearish analysts are not forecasting that Voyager Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Voyager Technologies's profit margin will increase from -63.8% to the average US Aerospace & Defense industry of 8.4% in 3 years.
• If Voyager Technologies's profit margin were to converge on the industry average, you could expect earnings to reach $36.6 million (and earnings per share of $0.5) by about December 2028, up from $-100.5 million today.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 64.5x on those 2028 earnings, up from -16.2x today. This future PE is greater than the current PE for the US Aerospace & Defense industry at 36.7x.
• The bearish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.51%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Accelerating demand for missile defense modernization through Golden Dome and NGI, coupled with Voyager's growing role on multiple prime and neoprime teams, could drive sustained revenue growth above current expectations and support a structurally higher earnings trajectory, lifting the share price.
• The structural transformation of the space industry with falling launch costs, rapid expansion of LEO constellations and a $179 billion addressable market, in which Voyager has a $3.6 billion qualified pipeline and a differentiated vertically integrated tech stack, could translate into faster backlog conversion, improving revenue visibility and long-term earnings power.
• Starlab, positioned as a commercial successor to the ISS with a targeted 2029 launch and management's expectation for over $4 billion in annual revenue and more than $1.5 billion in free cash flow over time, represents a multi decade infrastructure platform that, if executed successfully, could materially expand both revenue and net margins beyond what a flat share price would imply.
• Disciplined and accretive M&A, including EMSI, ExoTerra and BridgeComm, which are described as immediately positive for EBITDA and significantly accretive to gross profit margins, may accelerate Voyager's move from adjusted EBITDA losses to profitability, supporting higher earnings and a rerating of the valuation.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for Voyager Technologies is $26.05, which represents up to two standard deviations below the consensus price target of $39.83. This valuation is based on what can be assumed as the expectations of Voyager Technologies's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $45.0, and the most bearish reporting a price target of just $25.0.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be $435.1 million, earnings will come to $36.6 million, and it would be trading on a PE ratio of 64.5x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of $27.41, the analyst price target of $26.05 is 5.2% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.