SpaceX's Quick Return Seen as Positive for Satellite Industry - Macquarie (IRDM) (SATS)

September 13, 2016 1:23 PM EDT
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Following the September 1 dramatic explosion of the SpaceX Falcon 9 rocket, industry experts thought it could be 9-12 months before SpaceX spaceflights return. However, at the Euroconsult conference in Paris SpaceX President Gwynne Shotwell told attendees he anticipates a return to flight of the Falcon 9 in November 2016. This is seen as a a positive development for the satellite industry, Macquarie Capital analyst Andrew DeGasperi said.

The analyst notes recent statements by founder Elon Musk asking for help from the public in finding a cause for the explosion of AMOS-6 indicates that no 'smoking gun' has yet been found in the telemetry data/video feeds from SLC-40.

President Shotwell also said first flight will be at Cape Canaveral followed by Vandenberg AFB, which implies SES-10 will be up first followed by Iridium NEXT 1-10, DeGasperi notes. While SLC-40 was damaged they note another pad (LC-39) should complete its modifications by November, enabling Falcon 9 flights to begin from that site.

They still expect still expect Iridium (NASDAQ: IRDM) to be able to launch its first 10 satellites in 4Q16 and have minimal impact to the overall launch program. "While no date has been set, we think November/December launch is likely. Importantly, it will still enable Iridium to launch at least 60 satellites by the end of 2017 assuming the original calendar (2nd launch after 90 days and 3-7 at 60 day intervals), but this may be shortened as satellites are being manufactured at the rate of 1/week," the analyst said. "Given the issue was launch related, we don't expect a fall out to its COFACE covenants - recent amendments due to outside factors (Aireon, insurance) indicate a willingness by the credit facility to adjust its payments schedule as necessary."

Give the relatively short delay to SpaceX's manifest, they are recommending investors buy Iridium and Echostar (NASDAQ: SATS) on any weakness.

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