UPDATE: Piper Jaffray Reiterates Overweight on DigitalGlobe after Management Meetings
In a report published Monday, Piper Jaffray reiterated its Overweight rating and $32 price target on DigitalGlobe (NASDAQ: DGI)
Piper Jaffray reported that, “With the acquisition of GEOY, DGI adds advanced production and analytic capabilities, expanded satellite capacity, and $1.8B of expected synergies. These incremental capabilities should drive faster revenue growth, higher margins and meaningfully improved free cash flow for the "New" DGI over the next several years. Management noted a "sea of opportunity" for pricing and capacity optimization in the combined entity, which we expect to drive mid-teens (or better) organic revenue growth and adj. EBITDA margins of 50%+ by 2015 (from 36% in 2013E). Importantly, DGI's library (which generated 90% of 4Q 2012 commercial revenues) and the cost and time to build satellites represent significant barriers to entry.”
Shares of DigitalGlobe closed at $29.41 on Friday.
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