On Tuesday, Planet Labs (NYSE:PL) shares, currently valued at $1.22 billion by market cap, received an updated price target from Craig-Hallum, now set at $3.50, up from the previous $2.50, with the firm maintaining a Hold rating on the stock.
According to InvestingPro data, the stock appears fairly valued at current levels, with analyst targets ranging from $2.50 to $5.00. The adjustment comes amidst a mix of quarterly financial results and anticipation of the company's satellite launch.
The company reported revenue slightly below expectations, but EBITDA—a measure of profitability—exceeded projections. While still reporting negative EBITDA of -$77.18 million, the company maintains impressive gross profit margins of 55.77% according to InvestingPro analysis.
The guidance provided for Q4 (January 2025) was somewhat conservative, falling below analysts' top-line expectations, yet slightly surpassing EBITDA forecasts. Despite the tepid guidance, the analyst noted positive developments in Planet Labs' go-to-market strategy, highlighting the company's shift towards market-specific solutions and sales approaches.
The report also touched on the expected launch of Pelican-2 in January 2025, which is anticipated to bring enhanced features such as improved resolution and satellite interlinks. The launch is projected to meet robust demand as the full satellite constellation is developed.
Moreover, the company has managed to keep capital expenditures below prior estimates, aiming to prioritize profitability and free cash flow (FCF). The firm expects Planet Labs to achieve positive EBITDA by Q4, aligning with the company's previous guidance.
The analyst cited the stock's recent surge, with InvestingPro data showing an impressive 95.17% return over the past six months. The momentum is attributed to the new administration's policies that favor the efficiency and utilization of commercial space capabilities, as well as a focus on space military capacities.
InvestingPro subscribers have access to 12 additional key insights about Planet Labs, including detailed financial health metrics and growth indicators. These policies were first observed during the Trump administration and are expected to continue to positively influence the commercial space sector.
In conclusion, Craig-Hallum recognized improvements in Planet Labs' execution and growing business pipeline. Nonetheless, the firm is looking for a more favorable risk/reward profile before changing its stance on the stock, thus the decision to maintain the Hold rating.
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