Shares of Canada’s MDA Space (TSE:MDA) are down 25% after EchoStar (SATS) canceled a lucrative contract that had been announced only a month ago.
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EchoStar terminated its agreement with MDA Space as it announced plans to sell its AWS-4 and H-block spectrum licenses to Elon Musk’s privately held SpaceX for $17 billion in cash and shares.
As part of the new deal, EchoStar customers will be able to access SpaceX’s Starlink Direct to Cell service. The decision by EchoStar to cancel the deal it had previously announced with Toronto-based MDA Space leaves the Canadian company out in the cold and its share price plunging on Sept. 8.
Lost Opportunity
In a written statement, MDA Space said that the EchoStar contract termination is unrelated to its performance and that it will be compensated for all termination costs and fees under the agreement that had been signed on Aug. 1.
The canceled deal would have seen MDA Space serve as the prime contractor for EchoStar’s low Earth orbit satellite constellation. The initial contract was valued at $1.3 billion for MDA Space. That loss of revenue has sent the Canadian firm’s share price spiraling lower.
Is MDA Stock a Buy?
The stock of MDA Space has a consensus Strong Buy rating among seven Wall Street analysts. That rating is based on six Buy and one Hold recommendations issued in the last three months. The average MDA price target of C$53.50 implies 52.90% upside from current levels.
