"While EOS’s medium-term growth opportunity is now reaching tsunamic proportions, fuelled by strong projected demand for its IP, the key enabler of which is SpaceLink, COVID-19 is continuing to crimp near-term earnings. We have cut our CY21-23 forecasts to reflect EOS’s guidance, but retain our Buy in anticipation of strong cash conversion and new contract wins. Target 7,77 dollar.
It is our current expectation that full conversion of EOS’s contract assets to cash in CY21, in combination with sustainment of annual revenues >$200m will be enough to internally fund key medium-term business initiatives.
This excludes funding for SpaceLink, which will be off balance sheet, and assumes that key contracts going forward will include an upfront payment to assist the funding of associated working capital.
With market-leading laser technology and best-in-class engineering capabilities, we expect EOS to be a key participant in the next wave of technology-focused spending across defence and space communications."
EOS Price at posting:
$4.05 Sentiment: Buy Disclosure: Held
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