Back in September, I thought DigitalGlobe (DGI)
was a good name for growth-oriented investors to check out, as I
thought synergies from the GeoEye merger and growing commercial use of
satellite imagery and data could fuel a long run of above-average
growth. Shares have certainly cooperated since that mid-September report, with DigitalGlobe shares up about 18% and trouncing the S&P 500.
Whenever
a stock more than doubles the return of the market over a 12-month
period, it certainly makes valuation a valid question. I wouldn't say
that DigitalGlobe is an inarguable bargain at today's price, but many
large potential customers are stepping up their commitment to growing
businesses that rely on satellite data. I do worry that sell-side
analysts are playing the "the price has reached my target … so it's time
to raise the target" momentum game, but a long-term free cash flow
outlook still suggests meaningful opportunity.
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Commercial Becoming More And More Important For DigitalGlobe
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