Capital market and investment company Clear Street has issued its clients with a report on how it sees Rocket Lab’s acquistion of satellite operator Iridium, describing the transaction as a “watershed” moment for Rocket Lab.

“[The deal] effectively transforming the firm into a true vertically integrated space operator. By combining its industry- leading launch and satellite manufacturing capabilities with Iridium’s global L-band spectrum, RKLB secures an established base of 2.5 million users and nearly $500 million in annual EBITDA,” said the report.

Clear Street added: “We maintain our $129/per share price target and reiterate our BUY rating. Our valuation is based on a ~26x 2030E EV/Sales multiple applied to our $3.1 billion revenue forecast anchored on 20 annual Neutron launches. The multiple reflects the stock’s current ~36x NTM EV/Revenue average over the past year, discounted back from 2030E.”

Clear Street does not foresee any regulatory problems especially given that there is no overlap between the Rocket Lab and Iridium core businesses. The company also noted that the ‘direct-to-device’ race is “intensifying” with L-band as the prize.

Rocket Lab’s founder Sir Peter Beck, in a message to staff, said that “What comes next is going to be a hell of a ride and we’re truly just getting started. Our future has just been unlocked and accelerated.”

He added “With the completion of this deal Rocket Lab will become a fully integrated, self-launching Tier-1 space power delivering critical communications capability to millions of users worldwide. We will become the only company in the world that can build their own satellites, launch their own rocket and operate their own constellation across the only truly global network that provides coverage over every ocean, mountain and airway”.

Beck’s claim is based on the fact that Iridium is licensed to operate globally, while rival Starlink is still awaiting permissions in very many markets.

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Tags: iridium, Rocket Lab, starlink