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Hawk’s Nest

Call Spread Sees Upside for Small-Cap Aerospace Stock

by | Apr 20, 2022

Maxar Tech (MAXR) strong small-cap forming a bull flag near recent highs and drew 1000 July $40/$55 call spreads for $2.93 on Wednesday. MAXR has 8500 January $30 ITM calls in open interest from a big buy last July at $7.5M. Shares have upside to $45-$50 in the near-term out of this range. The $2.76B company trades 17.55X earnings and 1.55X sales with a small yield. MAXR provides earth intelligence and space infrastructure solutions including imagery products, geospatial information, robotics, sub-systems, and information solutions. MAXR is coming off a strong quarter as they add several key partners and agencies which has accelerated demand for their Intelligence products. The firm continues to make investments that will drive better capacity for the higher demand in their space infrastructure business. Analysts have an average target for shares of $42 with a Street High $52. Canaccord raising estimates in April as the company’s profile has been elevated on the global stage due to the war in Ukraine which has strengthened the competitive edge of its Earth Intelligence segment. The firm believes that the increased utilization of Maxar’s constellation has been a significant tailwind to its bid for the EOCL program, though it remains capacity constrained. RBC started at Outperform in January noting that after multiple delays on the launch of its WorldView Legion satellite constellation, the expected 2022 launch of the six-satellite constellation will be a positive catalyst. Short interest is 6.5%. Hedge fund ownership rose 1.75% last quarter. Insiders active in the name including the CTO adding $100K at $29 to $29.50.