Bank of America hits spacecraft builder Terran Orbital with rare double downgrade
Source
Bank of America downgraded spacecraft builder Terran Orbital from buy to underperform on Friday, hitting the space stock with a rare double downgrade due to concerns of a limited customer base and waning liquidity. Terran Orbital stock slipped 4%. Like many SPAC space companies, Terran's stock has slid steadily since its public debut near $12 a share in March 2022 . This year, it's down 24.7%. Bank of America also slashed its price target on Terran's stock to $1.35 from $7 a share. Terran Orbital ended the first quarter with $57.4 million in cash on hand, Bank of America analyst Ron Epstein noted, and is aiming to raise another $37 million in a direct offering. But that buys Terran "just one more quarter of liquidity," due to its current average burn rate of about $35 million a quarter, Epstein wrote. "We remain skeptical around the market's appetite" for higher risk space investments. Additionally, while Terran won a $2.4 billion contract from Rivada in February, Epstein thinks Terran's "backlog is overexposed" to the single customer, which makes up all but about $200 million of the company's current backlog. "We believe Terran's revenue ramp and margin expansion is overly tied to one single customer, which carries with it significant risk," Epstein wrote. – CNBC's Michael Bloom contributed to this report.