H.C. Wainwright analyst Scott Buck initiated coverage on Terran Orbital Corporation (NYSE:LLAP) with a Buy rating and a price target of $5.

With an existing backlog of $2.6 billion, a customer base that includes the U.S. Department of Defense, NASA, and the European Space Agency, and higher manufacturing capacity coming online later this year, the analyst anticipates a meaningful increase in revenue beginning in 2H23 and carrying through 2025. 

In 2024, the analyst estimates revenue of $485 million, up 92.4% from 2023 levels. 

Growth in 2024 continues to be driven by the company’s current backlog, aided by increased manufacturing capacity, allowing the company to produce almost 800 satellites annually.

As revenue scales in coming quarters, coupled with annual operating expenses of between $75.0 million and $100.0 million, Buck expects the path to profitability should become more apparent.

With as much as $2 billion of revenue expected, from current contracts, over the next two and a half years, the analyst believes that the company could achieve quarterly profitability as early as 4Q23.

The analyst expects the company to begin delivering on Tranche 1 satellites during 2023. 

Importantly, Tranche 2, which has yet to be awarded, is expected to total more than 200 space vehicles, Buck notes. 

These apart, vertical integration and partnership with Lockheed Martin Corporation (NYSE:LMT) should position the business for new contract wins as the industry benefits from a secular shift towards large satellite constellations. 

Given the tailwinds, Buck recommends investors accumulate LLAP shares ahead of this increase in revenue and full-year profitability expected in 2024. 

Price Action: LLAP shares are trading higher by 8.2% to $1.45 on the last check Friday.