MDA Space (TSX:MDA) Valuation in Focus After $1.8 Billion EchoStar Contract Termination and Share Price Reaction

If you are holding or eyeing MDA Space (TSX:MDA), you are probably weighing your next move after a dramatic twist this September. The sudden cancellation of a CAD $1.8 billion satellite contract by EchoStar, tied to an abrupt shift in EchoStar’s business strategy and spectrum sale to SpaceX, caught the market off guard. MDA Space stated clearly that performance issues were not to blame, and the company expects to be compensated for termination costs. However, the magnitude of this lost project is putting a fresh spotlight on its growth story and near-term certainty.

This event sent MDA Space’s shares down by 25% in a single day, punctuating what had been a year of strong momentum. Despite this jolt, shares are still up an impressive 96% over the past year and 14% year-to-date, reflecting both recent volatility and longer-term optimism. The company has not been standing still either, securing a contract to provide uncrewed aircraft for the Royal Canadian Navy and making leadership moves to grow its UK presence. All of this hints at a resilient strategy despite recent headwinds.

Now comes the tough question: is this a rare chance to buy into MDA Space’s long-term trajectory at a more attractive price, or is the market simply adjusting to a more realistic outlook for future growth?

Most Popular Narrative: 26% Undervalued

According to the most popular narrative by IndusyHoldings, MDA Space is currently perceived as undervalued by 26% against its fair value estimate. This outlook is built on assumptions of robust industry growth and expanding margins, which suggest a much higher earning potential in the coming years.

MDA Space can benefit greatly from the tailwind of the industry because they offer a wide product range that includes LEO and MEO satellites, space robots, and space rovers. The company has partnerships with OHB System AG, Huber+Suhner, and ThermAvant Technologies.

Want a closer look at why this stock might be more than just a rebound play? The most popular narrative points to aggressive growth assumptions and ambitious profit margins that could reshape MDA Space's story. What financial leap is this narrative counting on, and which mix of major partnerships could accelerate it? The answer lies in the next layer of the analysis.

Result: Fair Value of $44.08 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, government contract exposure and potential delays in Artemis missions could quickly change the optimistic growth outlook for MDA Space.

Find out about the key risks to this MDA Space narrative.

Another View: Multiples Paint a Different Picture

Looking from a different angle, using market earnings comparisons, MDA Space appears on the expensive side relative to the North American Aerospace and Defense average. The question is whether the market believes growth will keep outpacing expectations, or if it is pricing in too much optimism.

See what the numbers say about this price — find out in our valuation breakdown.

Stay updated when valuation signals shift by adding MDA Space to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own MDA Space Narrative

If you see the story differently or want to dig deeper into the numbers yourself, you can craft your own narrative in just a few minutes. Do it your way.

A great starting point for your MDA Space research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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