Is Maxar Technologies Stock A Buy? Maxar Technologies [NYSE: MAXR] has gotten a lot of attention for making cutting-edge products in a wide range of sectors, including robotics, satellites, and space exploration.
The company’s stock value fell dramatically during the second half of 2018. Maxar Technologies’ relatively low stock price makes it an attractive option to many investors who want to take advantage of a potentially under-valued company.
Maxar Leads Infrastructure For Space
It’s difficult to pinpoint what Maxar does because it has ongoing projects in so many technology sectors. The company built its reputation on space infrastructure, especially designing and manufacturing satellites, robotic arms, and other robotics.
For more than 60 years, Maxar has been a leader in space infrastructure. It has more than 90 satellites in orbit around Earth. When you add up the amount of time those satellites have spent in the sky, the company has about 2,200 combined years in orbit.
Satellite technology lets Maxar branch out into several crucial services. With its fleet of satellites orbiting the planet, Maxar can provide communication, observation, exploration, defense, and mapping services. Maxar rarely reaches its goals alone. Instead, it works in cooperation with other organizations, including private industries and the United States government.
Is Maxar Stock a Buy?
Over the last decade, Maxar’s stock price peaked at $80.70 in May 2015. The price experienced several peaks and valleys until July 2018, when it plummeted like an asteroid hitting earth from about $53 to just $5.59 within seven months.
Since bottoming out in February 2019, the company’s value has never fully recovered. Since February 2019, though, the price has grown in fits. On August 14, 2020, the stock’s price sat just slightly about $27 per share.
Is Maxar stock a buy? That depends on whether the stock can turn a profit again. Quarterly earnings had been positive but future projections look bleak. However, share prices will anticipate profits turning back positive again.
Some people believe that Maxar’s value will grow because people need better technology for predicting extreme weather conditions. Others believe that the company will grow as more private companies and government agencies continue exploring outer space.
The massive $1.9 billion SpaceX received to pioneer space has added to the overall sector bullishness which acts as a tailwind too.
Risks of Buying Maxar Stock
The biggest risk of buying Maxar stock is that a global financial crisis would force governments to tighten their belts and cut spending on technology.
Maxar could continue to work with private companies that develop technology for space exploration, global positioning, and telecommunications. It’s hard to imagine Maxar thriving without contributions from organizations like NASA, though.
On the other hand, a financial crisis would hurt the value of practically every companies’ stock.
Another issue could be a continued decline in earnings which stresses the Maxar balance sheet which in turn could hurt borrowing rates on debt financing should it become necessary.
Can Maxar Beat Its Competition?
Maxar works in a lot of sectors, so it faces a lot of competitors. Some of its top competitors include:
- Esri, a geographic information system company.
- Hexagon AB, a Swedish company that develops precision measuring technology.
- Autodesk, a software company that makes products for engineering, construction, and other industries.
Several startups also want to beat Maxar in global positioning, weather prediction, and mapping technologies. It’s unlikely that a startup will manage to harm Maxar’s reputation, though. The real competition comes from other established companies working on the cutting edge of technology.
Maxar has several advantages over its biggest competitors. First, it has a lower barrier to entry. Investors can buy Maxar stock for very little money compared to shares in a company like Autodesk, which has a price of over $240. Even Hexagon AB’s shares cost nearly $70.
Maxar does have some challenges to overcome, though. It doesn’t have any independent funding, so it must rely on revenues. Autodesk has about $145 million in funding that helps it develop new projects and expand its workforce when necessary.
Maxar also has a smaller number of employees than some of its biggest competitors. Maxar employs about 6,100 people. Hexagon AB employees more than 20,000. Autodesk has about 9,000 employees.
Luckily, Maxar generates respectable revenues. Its annual revenue is about $1.7 billion. Esri is considerably lower at $1.1 billion.
Hexagon AB has a considerably larger revenue ($4.2 billion), but it also has to support its large workforce.
Autodesk makes quite a bit of money ($3.4 billion per year), but Maxar has a couple more decades of experience. Those years of experience can matter a lot within an industry that relies on long-term relationships as much as the speed of technological development.
Is Maxar Stock A Buy: The Bottom Line
Maxar stock enjoys bullish sector tailwinds currently but Its earnings quarterly earnings projections remain in the red. A turnaround on the bottom line back to bullish territory could propel the stock back to old highs.
When examining the valuation of Maxar using a discounted cash flow forecast, the fair value estimate sits around $29 per share.
A share price above that level would signal higher risk than normal that prices could return back lower while a share price level 15-20% or more below that would be a sign that investors can scoop up a potential bargain.
Technically the stock has been showing signs of strength also in recent months which bodes well but keep in mind the seasonal weakness of the market in the October time frame.
When the overall market suffers, so too does just about every stock move in lockstep as correlation rises.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.