Markets
Redwire Stock Downgraded Due to Valuation, Insider Selling - B.Riley
By Hazle Jakubowski
July 22, 2024
On Monday, Redwire Corporation (NYSE:RDW) underwent a shift in stock rating when B.Riley analyst moved the company from a Buy to Neutral stance. This adjustment was made alongside an increase in the price target, which now stands at $8.00, up from the previous figure of $6.00.
This change comes after an impressive year for Redwire's share prices where they observed over 145% growth compared to just 8% rise of the Russell 2000 index. The decision by B.Riley analyst suggests a more cautious approach towards Redwire’s shares performance and actions of its major shareholder – AE Industrial Partners.
AE Industrial Partners is a private equity firm that controls approximately 55% of Redwire's equity and has recently sold around 390,000 shares of Redwire over this past week alone. This significant selling activity could be one factor behind this recent downgrade despite an upgraded price target suggesting continued confidence in the company's future growth potential.
The new price target set at $8.00 is based on a valuation multiple that remains unchanged at twice the projected future enterprise value to sales ratio for Redwire Corporation; taking into consideration any preferred stocks that might potentially convert into common shares.
Forecasts for fiscal year-end 2026 predict revenues reaching up to $398 million marking an annual increase rate of about13.5%. Furthermore, it anticipates achieving EBITDA worth around $43 million representing almost11% margin while expecting free cash flow to reach nearly$22 million.
Redwire may have been shifted down from ‘buy’ status but it hasn’t stopped making waves within its industry sector - space infrastructure solutions.
In fact, during Q1-2024 ,the corporation reported revenue growth by52%, reaching nearly$88m despite posting net loss amounting to roughly$8m .Moreover ,it confirmed expectations for full-year revenue guidance standing at about$300m ,indicating a YoY growth rate of23%.
In recent months, Redwire secured several major contracts including a follow-on order for more Roll-Out Solar Array (ROSA) wings from Thales Alenia Space for the Inspire satellite series. The company was also chosen by DARPA for an innovative satellite project known as the Otter program.
Redwire has been selected by the European Space Agency to develop a robotic arm prototype for Argonaut Lunar Lander and by NASA's Jet Propulsion Laboratory to conduct feasibility study of commercially-led Mars spacecraft.
Adding to its list of achievements is the announcement about development of Phantom – a new Very Low Earth Orbit spacecraft platform. It is also collaborating with Thales Alenia Space UK on developing Phantom European VLEO Platform - part of ESA’s Skimsat program. These are just some examples showcasing how despite changes in stock rating, Redwire Corporation continues its ambitious mission within the space infrastructure solutions sector.
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