Planet Labs lands multi-year deal with Swedish Armed Forces
Although Planet Labs (PL) landed some noteworthy contracts last spring, its stock got downgraded by Goldman Sachs analysts in April over concerns that the company remained unprofitable, which was becoming a bigger red flag in a high-rate, low-liquidity environment.
While Will Marshall, co-founder and chief executive of Planet Labs, would only say that the company is making "excellent progress on our profitability goals" in its third-quarter earnings release last month, the company's latest deal has Wall Street growing more confident about Planet Labs' direction.
The company said on Monday that it signed a multi-year "low 9-figure agreement" with the Swedish Armed Forces that calls on it to rapidly deliver a suite of satellites, space-based data, and awareness solutions that will be used to support Sweden's peace and security operations.
Planet Labs noted that this is the third contract it has signed over the past 12 months.
Last March, it was named a subcontractor on a $95 million multi-year deal under the California Air Resources Board’s Satellite Data Purchase Program (SDPP).
That same month, it inked a deal with the European Space Agency to support Greece’s National SmallSat Programme, and just last week it signed a three-year contract with EMDYN, a European intelligence and security services firm.
The San Francisco-based satellite imaging company — founded in 2010 by two former NASA scientists — runs the world’s largest fleet of Earth observation satellites.
As part of the agreement with the Swedish Armed Forces, the country will own a suite of Planet Lab's satellites and also have access to the company's high-resolution data and intelligence solutions.
Planet Labs said that by "standardizing this model" with Sweden, it is offering "sovereign nations a cost-effective, low-risk, and fast pathway to advanced space-based capabilities without the prohibitive capital investment and operational complexities of building proprietary standalone systems."
Wall Street sees 'many more' deals in the coming years
The company said that it has launched nearly 600 satellites to date, offering near-daily scans of the Earth's landmass and tens of million square kilometers of global oceans.
“Europe needs its own eyes, and Sweden is leading the way by rapidly securing its own, comprehensive space capability – helping achieve its own security objectives and assisting regional allies, like Ukraine, with timely, critical information,” Marshall said in a statement.
“By leveraging Planet’s scaled production line and agile aerospace methodology, Sweden achieves both the speed and the long-term sovereignty they require, without compromise.”
On Tuesday, Morgan Stanley analyst Kristine Liwag maintained an Equalweight rating on Planet Labs' shares, but raised the bank's price target 30% to $26 from $20.
Liwag said in a client note that the deal with Sweden "underscores continued momentum in its business model shift toward Satellite Services & highlights ongoing demand for sovereign imaging capabilities."
Meanwhile, Craig-Hallum analyst Jeff Van Rhee maintained a Buy rating, while raising the firm's price target 50% to $30 from $20, projecting a "very bright next several years" for Planet Labs.
Van Rhee is expecting "many more of this type of deal playing out over the next few years" for Planet Labs.
"In sum, PL has built an industry leading value proposition leveraging global re-scan, hi-res tasking, and deep Al based domain expertise," he said. "With US pressures for many allies to take up some of the cost of self-defense, many sovereigns are aggressively seeking dedicated capacity or ownership to assure timely access to leading edge earth observation insights."