Gen-3 Satellite Rollout Will Expand Global Constellation

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AnalystConsensusTarget
Consensus Narrative from 8 Analysts
Published
30 Mar 25
Updated
01 Aug 25
AnalystConsensusTarget's Fair Value
US$23.75
20.6% undervalued intrinsic discount
01 Aug
US$18.86
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133.4%
7D
-4.7%

Author's Valuation

US$23.8

20.6% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update01 Aug 25
Fair value Increased 5.56%

Driven by a notable improvement in profitability and a sharp decline in future P/E, analysts have increased BlackSky Technology's consensus price target from $22.50 to $23.75.


What's in the News


  • BlackSky has secured multiple major contracts, including a $24M+ order with the National Geospatial-Intelligence Agency, new international defense clients for Gen-3 satellite services, and expanded on-demand monitoring for Latin American defense customers.
  • The company continues rapid deployment of its Gen-3 very high-resolution satellites, with demonstrated operational capability including imagery delivery within hours of launch and strong customer feedback on the utility of 35-centimeter data.
  • BlackSky was selected by the U.S. Navy for advanced optical inter-satellite link (OISL) terminal development, positioning future Gen-3 satellites for secure, high-speed, laser-based satellite-to-satellite communications.
  • Plans for next-generation AROS multispectral satellites were unveiled, targeting country-scale mapping and 3D digital twin applications, leveraging the LeoStella acquisition and BlackSky's vertically integrated manufacturing.
  • BlackSky underwent significant index rebalancing, being added to multiple Russell Growth and Microcap indexes while being dropped from various Russell Value indexes, reflecting a shift in classification.

Valuation Changes


Summary of Valuation Changes for BlackSky Technology

  • The Consensus Analyst Price Target has risen from $22.50 to $23.75.
  • The Future P/E for BlackSky Technology has significantly fallen from 83.13x to 74.63x.
  • The Net Profit Margin for BlackSky Technology has risen from 6.57% to 7.00%.

Key Takeaways

  • The Gen-3 satellite launch and expanded government contracts drive demand, revenue, and future growth, enhancing BlackSky's competitive advantage.
  • Strong long-term contracts and LeoStella integration improve revenue visibility and cost efficiency, boosting net margins and future profitability.
  • Delays in contract transitions and reliance on government contracts can impact revenue growth and stability, while integration costs and macroeconomic factors affect margins and efficiency.

Catalysts

About BlackSky Technology
    Operates as a space-based intelligence company in North America, the Middle East, the Asia Pacific, and internationally.
What are the underlying business or industry changes driving this perspective?
  • The successful launch and operation of the Gen-3 satellites, with significant advancements in imaging technology and cost efficiency, is expected to drive increased demand and revenue as the company plans to rapidly expand its constellation.
  • BlackSky's strategic long-term contracts, including a recent 7-year contract valued at over $100 million, provide strong revenue visibility and indicate customer confidence in the company's capabilities, positively impacting future revenue growth.
  • The integration of LeoStella for satellite manufacturing supports operational efficiency and supply chain visibility, which should help manage costs and enhance net margins in the long term.
  • Expansion of high-profile government contracts, such as the continued work with NRO and potential additions for Gen-3 services, suggests sustained and possibly increasing earnings from U.S. government clients as capacity comes online.
  • The continued rollout of Gen-3 satellites promises to improve image quality and AI capabilities, potentially leading to higher margin service offerings and competitive advantage in the growing market, benefiting net margins and overall earnings.

BlackSky Technology Earnings and Revenue Growth

BlackSky Technology Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming BlackSky Technology's revenue will grow by 25.2% annually over the next 3 years.
  • Analysts are not forecasting that BlackSky Technology will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate BlackSky Technology's profit margin will increase from -50.5% to the average US Professional Services industry of 6.6% in 3 years.
  • If BlackSky Technology's profit margin were to converge on the industry average, you could expect earnings to reach $13.9 million (and earnings per share of $0.33) by about July 2028, up from $-54.2 million today.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 83.1x on those 2028 earnings, up from -12.9x today. This future PE is greater than the current PE for the US Professional Services industry at 23.7x.
  • 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 6.82%, as per the Simply Wall St company report.

BlackSky Technology Future Earnings Per Share Growth

BlackSky Technology Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • The transition from the NGA EIM contract to Luno took longer than expected, impacting imagery revenue growth, which could affect near-term revenue streams.
  • The integration of LeoStella has led to increased operating expenses, impacting the cost structure and reducing potential net margins.
  • There is uncertainty regarding the pace and ramp-up of Luno and Gen-3 related contracts, which could impact revenue visibility and forecasts.
  • Macroeconomic factors like potential tariff talks and supply chain uncertainties may increase CapEx requirements, affecting the overall cost efficiency and cash flow.
  • The reliance on U.S. government contracts exposes the company to risks from budget cuts and changes in defense spending priorities, potentially impacting long-term revenue stability.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of $22.5 for BlackSky Technology based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $31.0, and the most bearish reporting a price target of just $16.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $210.8 million, earnings will come to $13.9 million, and it would be trading on a PE ratio of 83.1x, assuming you use a discount rate of 6.8%.
  • Given the current share price of $20.14, the analyst price target of $22.5 is 10.5% higher.
  • 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.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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