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Maxar Technologies and MicroStrategy have been highlighted as Zacks Bull and Bear of the Day

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·12-min read
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For Immediate Release

Chicago, IL – January 12, 2022 – Zacks Equity Research shares Maxar Technologies MAXR as the Bull of the Day, and MicroStrategy MSTR asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Lockheed Martin LMT, Raytheon Technologies RTX and Northrop Grumman NOC.

Here is a synopsis of all five stocks:

Bull of the Day:

Maxar Technologies is a $2.2 billion provider of space technology including satellite imagery and expert intelligence services. Along with spacecraft and robotics for space exploration, research and national security, Maxar helps customers understand and better navigate the evolving planet, deliver global broadband communications, and engage our greatest frontier yet with the right infrastructure.

Remarkably, the company is trading for under 1.2 times sales, projected to grow 5.5% to $1.87 billion this year.

Maxar has two segments — Earth Intelligence and Space Infrastructure — both of which operate in the Earth Observation and Satellite Manufacturing markets.

Earth Intelligence (accounting for 60.1% of total revenues in third-quarter 2021): Maxar is a global leader in high-resolution space-based Earth observation imagery products and analytics. It launched the world’s first high-resolution commercial imaging satellite in 1999 and currently operates a four-satellite imaging constellation. The segment offers imagery solutions delivering mission-critical information about the changing planet and supports a range of government and commercial applications. Maxar’s main customers in this segment are U.S. and international federal agencies (primarily defense and intelligence wings), as well as commercial customers in multiple markets. It also provides geospatial services that combine imagery, analytic expertise, and innovative technology to deliver intelligence solutions to customers.

Space Infrastructure (39.9% of revenues): In this segment, Maxar builds and tests solutions for space-based communications satellites, Earth observation, on-orbit servicing, robotic assembly, and space exploration. It is partnering with the U.S. government in new space opportunities leveraging its high-performance spacecraft subsystems. Its principal customers in this segment are commercial satellite operators and government agencies worldwide. Maxar has built and launched more than 285 spacecraft with a combined 2,750 years of on-orbit service. It has more than 30 years of experience in space robotics, having developed all five robotic arms on the Mars landers and rovers. It has 90 Geosynchronous Equatorial Orbit (GEO) satellites and 26 Low Earth Orbit (LEO) satellites currently in service.

Innovation in the News

In late December, Maxar Technologies announced it had extended agreements with three defense customers. The company announced contract extensions with three long-standing international defense and intelligence customers. The three agreements total more than $100M and extend these customers' ability to directly task and download 30 cm-class satellite imagery to their ground stations from Maxar's current constellation under Maxar's Direct Access Program.

This program enables defense, intelligence and commercial customers to access the world's most advanced Earth imaging satellites, with encrypted downlinks, committed availability and data distribution rights that fit mission needs. One of the contracts provides a commitment to purchase direct access to Maxar's next-generation WorldView Legion satellites, the first of which are expected to launch between May 15-June 13, 2022. This is the company's second commitment for WorldView Legion capacity.

Also in December, Maxar was selected by the U.S. DOD Defense Innovation Unit (DIU) to produce robotic arms for on-orbit servicing of satellites and other space vehicles.

Analyst Reactions

On December 13, Goldman Sachs named Maxar as one of its top picks with 75% upside for shares.

But on Dec 20, Maxar Technologies saw its price target lowered to $32 from $40 at Canaccord Genuity. Analyst Austin Moeller noted that Maxar had issued a press release indicating they have secured a launch window with SpaceX for the first two Legion EO satellites but also indicated that the first two satellites remain in the testing phase, with hardware performance testing, software testing and environmental testing still in progress.

This view has probably kept a lid on the stock's advance recently.

Among other positive views, Baird analyst Peter Arment upgraded L3Harris Technologies to Outperform from Neutral with an unchanged price target of $248, citing its discount to other defense prime contractors, and called it a top pick for 2022 in the space. The analyst, who noted that most defense stocks valuations have been resetting as budgets peaked, sees good value for certain stocks in the space and highlighted Maxar Technologies as his other top pick and a current Fresh Pick for 2022.

Eyes All Over the Planet

Maxar appears to be an affordable way to play the space industry. I recently bought it for my Zacks TAZR Trader portfolio.

In addition to helping scientists monitor extreme weather conditions and wildfires, Maxar also has eyes on geopolitical maps like the Ukraine that allow more access to information. The company was recently mentioned in the Wall Street Journal article "Russia's Military Buildup Near Ukraine Is an Open Secret" because "Satellite images, social media posts and flight-tracking data allow private analysts to track details governments once classified."

Thanks to Maxar eyes in the sky, the more we know, the better.

Bear of the Day:

MicroStrategy is the $5 billion software, logistics, and IT consulting firm that has become synonymous with the idea of the "Bitcoin balance sheet."

The company's iconic "laser eyes" CEO, Michael Saylor, is often seen on financial and social media expressing the virtues of accumulating Bitcoin for the inevitable run toward $100,000 and much higher.

Looking at the topline revenue growth of MSTR that might justify trading for over 9 times sales, we see 2021 was a year of projected 5.83% growth to $508.75 million.

The coming year doesn't improve much, with only 5.08% forecast growth to $534.6 million.

Shifting to the bottom line, MSTR is coming off of a stellar growth year with projected profits of $6.66 per share, representing a 28.8% advance.

This makes the P/E valuation pretty rich at over 70 times. And next year's EPS forecasts by analysts don't leave much to get excited about with flat to negative growth.

Where Does Bitcoin Fit In?

This is only based on the contributions of two analysts, but therein lies part of the problem. When analysts aren't sure how to model the earnings growth of a company that owns more Bitcoin than its market capitalization, some have preferred to close up their spreadsheets and move along elsewhere.

According to Fortune magazine, in late November recent new Bitcoin purchases by MSTR pushed their holdings to just over 121,000 of the precious "coins."

This lot was valued at nearly $7 billion then. And with an average purchase price of about $29,500 per coin, the company was showing a net gain of about $3.4 billion on those investments.

But Bitcoin has continued its epic slide from all-time highs above $68,000 and MSTR fortunes have fallen with it. The stock of the company was at nearly $900 in early November and this week bounced off of $450.

Grasping MSTR Without BTC

I've written about MSTR in the past as an innovator in global trade logistics, with potential in using Blockchain applications. This core business should be of interest to many investors looking for intelligent exposure to the future of trade.

They just inked a deal with TD SYNNEX whereby MicroStrategy's comprehensive software platform will include self-service data discovery, enterprise reporting, mobile applications, and embedded analytics to facilitate expansion of TD SYNNEX’s internet of things, data, and analytics portfolio.

As Bitcoin struggles to hang on to support above $40K, many bears are ringing the death rattle. Like Peter Schiff, who believes a bigger reckoning toward $30K is coming.

Whatever the fate of Bitcoin, various MSTR investors may see new opportunities on the horizon.

Just wait until the earnings estimates stabilize. The Zacks Rank will let you know.

Additional content:

U.S., Japan Vow to Strengthen Defense Ties: Stocks to Benefit

The U.S. diplomatic and defense leaders recently participated in a virtual meeting with their Japanese counterparts amid rising threats in the Indo-Pacific region posed by China. Ministers at both ends also exchanged their concerns about North Korea’s recent advancement in nuclear and missile development activities.

Such emerging defense threats led both these allies to decide on signing a new defense collaboration deal, as stated by U.S. Secretary of State, Antony Blinken. This should benefit stocks like Lockheed Martin, Raytheon Technologies and Northrop Grumman.

What’s Driving the Collaboration?

Tensions between China and Japan in the East China Sea continue to increase. Japan fears that China’s coercive activities in this region might undermine its administration of the Senkaku Islands, thereby disrupting regional peace and stability. Japanese ministers also reiterated their strong objections to China’s unlawful maritime claims, militarization and coercive activities in the South China Sea.

North Korea, which was absent from defense news for some time, is back in the spotlight after hurling missiles. North Korea test fired its second ballistic missile targeting South Korea at the start of 2022. Such activities not only put South Korea in danger but also threaten the peace and safety of Japan and the surrounding areas of the Indo-Pacific region.

Also, defense challenges posed by Russia have been a cause of concern. Moscow’s military buildup on Ukraine’s borders and its increasingly harsh rhetoric not only threaten Ukraine’s sovereignty and territorial integrity but peace and stability across Europe.  Beijing and Moscow are deepening their military cooperation, which might become a significant threat for the United States and its allies.

These emerging threats have forced the United States and its long-term ally to enhance their readiness and strengthen integrated deterrence capabilities through an expanded defense collaboration.

Defense Stocks to Benefit

It is quite evident that enhanced defense ties between the United States and Japan will boost U.S. defense stocks that already have a well-established base in Japan. These include:

Lockheed Martin: The company delivers cutting-edge technologies and innovations to support the future prosperity of Japan and its communities. More than 550 military helicopters have been produced for the Japan Self-Defense Forces under manufacturing license agreements with Sikorsky, a unit of Lockheed. LMT also delivers its F-35 aircraft as well as Aegis Combat System to Japan.

Lockheed has a long-term earnings growth rate of 3.6%. The company delivered an average four-quarter earnings surprise of 63.28%.

Raytheon: Japan is working with Raytheon and the Missile Defense Agency (MDA) to develop and deploy the next-generation SM-3 Block IIA missile, which will provide a larger area of defense against more sophisticated threats. The missiles will be deployed on Aegis cruisers and destroyers to defend against short-to-intermediate range ballistic missile threats in the midcourse phase of flight.

Raytheon boasts a long-term earnings growth rate of 13.2%. The company came up with an average four-quarter earnings surprise of 9.06%.

Northrop Grumman: The company has a long history in Japan dating back to the late 1950s when the Japan Self-Defense Force (JSDF) used the Grumman Avenger aircraft for maritime patrol, the Albatross aircraft for search and rescue, and the Tracker aircraft for anti-submarine warfare. The close partnership with Japan continues today with Northrop Grumman providing support to all the major branches of the JSDF on a range of defense, security and information systems programs.

Northrop has a long-term earnings growth rate of 9%. The company delivered an average four-quarter earnings surprise of 14.74%.

Zacks’ Top Picks to Cash in on Artificial Intelligence

This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.

See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>

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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
MicroStrategy Incorporated (MSTR) : Free Stock Analysis Report
 
Maxar Technologies Inc. (MAXR) : Free Stock Analysis Report
 
Raytheon Technologies Corporation (RTX) : Free Stock Analysis Report
 
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