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Seeking Alpha analysis, price targets, and buy rating on Planet Labs

Over the weekend on June 15, 2024, “May Investing Ideas” posted some analysis on Planet Labs. The conclusion is Planet’s stock should be within the range of $1.90 to $3.50 by 2029. This equates to up to 65% upside over the share price now.

I like Seeking Alpha because the analysis is generally original and not AI generated. This article is no exception. “May Investing Ideas” bases its analysis on Planet management’s financial model from a July 2021 investor presentation. In that model (which Planet completely failed to hit), Planet was to reach $693 revenue and $515 gross profit in FY 2026. The Seeking Alpha article pushes this back to FY 2029 and then uses price-to-revenue metrics between 0.9 and 2 to calculate the expected share price. The article notes Planet must achieve a 26% compound annual growth rate (CAGR) to hit $693 revenue by FY2029.

A few points for considering after reading the article:

  1. Oddly the article pushes a price between $1.90 to $3.50 by 2029. But the table appears to instead calculate a range of $1.65 to $3.05. It is not clear how the author calculated the stated $1.90 to $3.50 range.
  2. Planet’s growth rate has been between 11-15% each for the most recent four quarters. “May Investing Ideas” provides no believable path on how Planet will increase this to 26% CAGR.
  3. Even if Planet captures all Blacksky’s and Satellogic’s revenue, Planet still would be less than half way to $693 million. Will the satellite imagery market really expand so quicky to allow Planet to obtain $693 million revenue by FY 2029?
  4. Satellite imagery competition will continue to heat up. Nara Space in Korea just raised $14.5 million to expand its imagery constellation. Japan’s Axel Space in December raised $44 million more to launch more of its earth surveillance satellites. And two weeks ago Greece’s Open Cosmos secured €60 million to launch its high resolution earth observation constellation. Its not going to be easy money for Planet Labs like it was when they were first to market.

The cash Planet is sitting on provides a lot of runway. But long term competitive prospects still make me nervous.

By spacesr