The Increase in Value of Planet Labs' Shares Gains Elevation
Planet Labs (-4.04%) stock took a hit alongside the broader market this week, but thanks to favorable remarks from investment bank Morgan Stanley, the space company is swiftly recovering its losses.
On Thursday, Morgan Stanley's revised price prediction halted the stock's downturn and even boosted Planet Labs' market value by a slight percentage. As of 10 a.m. ET today, Planet Labs stock has surged an additional 3%.
Morgan Stanley's Take on Planet Labs
Thoughts on Planet Labs were scant in Morgan Stanley's report, but the bank did increase its price prediction for Planet Labs stock to $4.50 per share, while maintaining the stock's overall assessment at "hold" (equivalent to neutral). This marked the second instance this week that Wall Street expressed a warmer sentiment towards Planet Labs. On Monday, investment bank Citigroup also raised its price prediction for Planet Labs stock – to $5 a share.
Citi's optimism was grounded in the same factors that piqued my interest in Planet Labs' recent financial statements. Although the company's third-quarter revenue growth was moderate, profit margins demonstrated notable improvement. Citi also anticipates Planet Labs' sales growth to improve over the subsequent four quarters.
Meanwhile, yesterday's note from Morgan Stanley emphasized "key uncertainties" – mainly the possibility of Elon Musk's Bureau of Government Efficiency (DOGE) reducing defense spending on businesses such as Planet Labs photography services.
A Potential Threat to Planet Labs Stock
Although lacking in specifics, this is indeed an aspect that Planet Labs shareholders ought to pay attention to. While the company currently leads the world in operating the largest constellation of Earth observation satellites, catering to the Pentagon's strategic interests, Elon Musk's SpaceX, too, is venturing into this field via its defense sector of Starlink, named Starshield. Apart from delivering communication capabilities, SpaceX has expressed interest in utilizing its satellites for Earth observation services.
At the moment, Planet Labs would do well to avoid direct competition with Elon Musk.
Morgan Stanley's increased price prediction for Planet Labs stock to $4.50 per share, despite maintaining a "hold" rating, has contributed to the company's ongoing recovery in the market. Furthermore, to support their optimism, Morgan Stanley highlighted the improvement in Planet Labs' profit margins and anticipated sales growth over the next four quarters.
