Cantor on strategic competition in government technology and space

Cantor analyst, Colin Canfield released a report on Government Technology and Space sector companies.

The analyst said, “Street coverage to date of the Space industry has done a good job sizing the potential opportunity, but we think there’s still room for improvement around understanding how strategic competition will change the shape of the Space industry, how companies execute within that framework, and what it implies for equity valuations. Recent outperformance suggests a significant improvement in buy-side sentiment around Space equities, although we think much of this has been related to retail liquidity benefits, rates, and institutional portfolio factoring. Looking forward, we think Space is quickly becoming a “catalyst-cycle” driven story whereby the arrival of incremental good news can help drive names higher, despite elevated valuation. Longer term, we think the best-positioned names will be the ones that are aligned to service strategic competitors to SpaceX, although greater competition should help continue to help pricing for companies with capability and proven execution.

“Company initiations – We initiate coverage of IRDM (Overweight), PL (Overweight), and VSAT (Neutral), as well as transfer coverage of RDW while maintaining an Overweight rating. Among our names, we think IRDM is best-positioned to benefit from price accretion from improvements in Space sentiment alongside healthy growth in CF and portfolio optionality (D2D, Intelligence). We also think our other names have significant catalyst pipelines like AI pricing tailwinds, international growth, and SDA opportunities, although we think IRDM’s cash flow stability generates a substantial valuation moat as companies navigate an increasingly complex risk environment. Potential Catalysts/Events – 1) 4Q Earnings; 2) FY26 Budget Request; 3) Space Symposium; 4) Fed Rate Decisions; and 5) Satellite Deployments/Launches” the report stated.

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