Here's Why Wells Fargo Sees 55% Upside In Maxar Technologies

Wells Fargo analyst Matthew Akers initiated coverage of Maxar Technologies Inc MAXR with an Overweight rating and a $39 price target (55% upside).
MAXR is the established leader in satellite earth imaging, with potential upside in space infrastructure if the LEO small satellite boom plays out as planned, Akers stated.
While MAXR is a firmly entrenched "old space" company, its space infrastructure business provides exposure to potential "new space" upside, he believed. If new space is this profitable, it could drive a significant upside to MAXR's margins.
Akers believes Maxar's recent EOCL contract win de-risks its earth observation outlook. At the same time, its upcoming Legion satellite launches provide a catalyst and further expand its lead in high-resolution imaging.
Maxar's multiple could expand, and cash flow could benefit as it de-leverages, Akers noted.
He thinks MAXR stands out compared to the other space companies thanks to its steady sales and profits.
Among the companies WFC tracked, MAXR posted the highest revenue run rate and margins, which he believed will continue in the future.
MAXR's upcoming launch of Legion satellites on three separate SpaceX Falcon 9 could serve as catalysts for the stock, as per Akers.
He thinks MAXR's multiple can expand as it continues to pay down its debt balance, and its cash flow should improve as it de-levers.
Price Action: MAXR shares traded higher by 4.49% at $26.31 on the last check Tuesday.