The Stars are Aligning for Astra Space Stock

This article was originally published on this site

Astra Space (NASDAQ:ASTR) launches satellites, and investors should consider buying ASTR stock right now. That isn’t only because billionaires like Richard Branson, Jeff Bezos, and Elon Musk are garnering a lot of attention for their forays to space. 

Source: Alones / Shutterstock.com

Rather, it’s because Astra Space, which isn’t trying to bring humans into orbit like those aforementioned CEOs, is a strong contender in the burgeoning space industry in its own right. In other words, the company stands on its own merits. 

ASTR stock is interesting because of the company’s fundamentals. Let’s begin by looking at those and then diving deeper into what differentiates it from the bigger firms that are involved in the newest space race. 

Fundamental Appeal

Those considering investing in Astra’s stock should note that the shares look to be trading at a discount. Investors can  purchase ASTR stock for just over $11. The good news is that analysts’ average price target on the name is $13. That, of course, implies  that the shares are undervalued. 

However, it is also important to know that there is only one analyst who currently covers Astra Space. The reason to tread carefully in such a situation is obvious: Any of the multiple assumptions that each analyst uses to calculate a price target can be flawed. So, the more  analysts who have issued price targets there are , the greater our confidence in their average price target should be. 

But InvestorPlace writer Mark Hake utilized the same quantitative models that Wall Street equity firms do and concluded that ASTR stock deserves a price target of $12.40. 

How does the company look from a financial perspective?

Astra’s Q2 Results

One the one hand, a snapshot of Astra Space’s recent earnings report is worrisome for investors. The company’s EBITDA losses are increasing year-over-year. Through the first half of last year, its EBITDA loss came in at $16.4 million. That figure more than doubled in the first half of 2021, hitting $34.8 million. 

And in Q3,  the company expects to incur an EBITDA loss between $32 million and $35 million. 

But I am nonetheless  upbeat on ASTR stock because of the company’s cash on hand and its projected revenues. 

Astra Merged With a SPAC 

On July 1, Astra Space closed on its merger with a SPAC called Holicity. As a result, ASTR stock now trades on the Nasdaq Exchange and added $464 million of cash to its balance sheet. The PIPE transaction that made the company a publicly traded entity also ensures that it will not be starved for cash anytime soon. 

The company has cash, but it doesn’t yet bring in any revenue. However, now that the company has merged and has landed several contracts, its growth outlook appears to be strong. 

The single analyst who covers ASTR stock believes that its 2021 revenue should reach $3 million. The analyst also predicts that Astra’s sales will balloon nearly 2,000% to $59.9 million by the end of 2022. 

The vast majority of Astra’s future revenue is expected to comes from the contracts that the Alameda, California company has signed. 

In the month of August alone, it has signed three deals. On Aug. 5, the company announced that it would launch a payload for the United States Space Force.  The launch is expected to occur between Aug. 27 and Sept. 11. 

On Aug. 9, Astra divulged that it had secured another contract with the Space Force. The IDIQ (Indefinite Delivery/Indefinite Quantity) deal covers a nine- year period and approximately 20 missions. 

Finally, on Aug. 12,  Astra Space announced that Spire Global (NYSE:SPIR) would begin using its launch services early next year. 

The Bottom Line on ASTR Stock

ASTR stock looks poised to rise significantly. With the space tourism industry bringing billions of investment dollars to the broader space sector, Astra Space could climb much higher in the coming years.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.