Q: With the recent drop in stock price, due to a misunderstanding of where their funding comes from, is the stock worth buying? and at what price? TIA
5i Research Answer:
We don't like using this word in answers, but 'probably'. The Canadarm 3 contract is not directly impacted, and the 14% stock decline Friday was likely too much based on current fundamentals for the company. However, sentiment is much harder to call. Space as a theme has been fairly hot in the US, and with NASA budget cuts it may certainly cool off. But in March MDA noted that 90% of the company's $4.4B backlog is outside of the US, and considering current revenue this brings it towards the end of the current US political term, and budgets have a way of changing. MDA is now 18X earnings and is now in a small net cash position on its balance sheet. We think longer term investors will still be rewarded here.