Q: With the announcement today of a 24% cut in NASA's budget, including scrapping Gateway, the lunar space station, does this affect MDA enough that it is no longer a desirable stock to hold? The Canadian Space Agency had awarded MDA a $1 billion contract to build Canadarm3 for Gateway, so they have lost a major contract there.
5i Research Answer:
On Friday, MDA put out a notice: The company said that the Canadarm3 program associated with the Gateway project is under a contract with the Canadian Space Agency, not with NASA, and therefore remains unchanged. The Canadarm3 contract serves multiple purposes including both space agency and commercial opportunities. There has been no change to any MDA Space contract as a result of these U.S. budget deliberations. Still, sentiment may stay weak here, as the company is highly sensistive to large contracts. With the big decline, at current levels we would still be willing to hold this, but the growth outlook may be changing somewhat. It will need to win some new, non-NASA business to keep investors interested longer-term.