Evaluating MDA Space (TSX:MDA) After Choppy Share Price Moves And An Undervaluation Debate

MDA Space (TSX:MDA) has been drawing fresh attention after its recent share price swings, with the stock showing mixed returns across different timeframes as investors reassess this Canada based space technology provider.

See our latest analysis for MDA Space.

Recent trading has been choppy, with a 10.68% 1 month share price return offset by a 26.64% 3 month share price decline. The 3 year total shareholder return is around 4x, which points to long term momentum alongside fading short term enthusiasm as investors reassess growth expectations and risk.

If MDA Space has you rethinking your exposure to space and defense, it could be a good moment to scan aerospace and defense stocks for other ideas in the sector.

With a CA$27.56 share price, annual revenue of CA$1.48b and net income of CA$109.6m, plus a published analyst price target of CA$40.19, is MDA Space quietly undervalued, or is the market already pricing in future growth?

With a fair value estimate of CA$40.19 against a CA$27.56 last close, the most followed narrative sees a sizeable valuation gap that hinges on future contract wins and margin shifts.

The ramp-up of large LEO constellation contracts, including the landmark $1.8 billion EchoStar direct-to-device satellite order with options to expand, and multiple pipeline opportunities in broadband, defense, and IoT, is expected to drive robust multi-year revenue growth as global demand for satellite connectivity accelerates.

Read the complete narrative.

Curious what has to happen between now and 2028 for that higher value to make sense? Revenue compounding, margin lift, and a premium earnings multiple all need to line up. The narrative spells out how those moving parts could fit together.

Result: Fair Value of $40.19 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, this depends on large constellation orders arriving on schedule and new manufacturing capacity being fully used. Any delays or underutilization could put pressure on margins.

Find out about the key risks to this MDA Space narrative.

Analysts see MDA Space as 31.4% undervalued against a CA$40.19 fair value, yet the SWS fair ratio for its P/E is 26.7x versus the current 31.8x. That gap points to valuation risk if sentiment cools. Which signal do you put more weight on right now?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out MDA Space for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 877 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match – so you never miss a potential opportunity.

If you look at the numbers and reach a different conclusion, or just like testing ideas yourself, you can build a custom view in minutes with Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding MDA Space.

If you are serious about sharpening your portfolio, do not stop at one stock. The right mix of ideas can change your whole return profile.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include MDA.TO.

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