Astra Space: Shares Launch In 2023 Amid A Growth-Story Comeback

Earnings season broadens out this week after the banks reported during the middle of the month and before mega-cap tech’s Q4 figures hit the tape next week. The industrial sector has been an underperformer to kick off 2023, but earnings growth in the space is seen as being robust at +10% in 2023 with another 14% of EPS upside next year.

There are clearly tailwinds for the value and cyclical areas, but not all the stocks in the group feature favorable profit trends. Let’s take a look at a low-priced story stock that has recently seen bullish price action.

2023, 2024 Sector Growth Forecasts: Industrials Impressive

According to Bank of America Global Research, Astra Space (NASDAQ:ASTR) is a launch service provider focused on meeting the demands of small satellite manufacturers with payloads less than 600kg. ASTR offers access to space via low-cost rockets that are built in-house, intending to expand into satellite manufacturing and in-orbit servicing.

The California-based $159.4 million market cap Aerospace & Defense industry company within the industrial sector has negative trailing 12-month GAAP earnings and does not pay a dividend, according to The Wall Street Journal.

Space stocks continue to catch the eyes of investors seeking a 2023 theme of more investment into technology and defense. ASTR, though, had a huge earnings miss last October, but shares eventually managed to find a floor. Recently, there have been positive headlines regarding Astra Space’s spacecraft engine business, which has helped to launch the stock off the lows. With layoffs in the rearview mirror, there could be a growth runway – or at least trends from ‘awful’ to ‘less bad.’ I detailed other risks and potential upside catalysts in my prior reports.

On valuation, analysts at BofA see even more downside to earnings in 2022 with a rough finish to the fiscal year. The sellside group left its 2023 and 2024 EPS estimates unchanged in a recent update. The Bloomberg consensus forecast, meanwhile, is less dour about 2022 per-share profits, but about in line with the tepid outlook over the coming quarters.

With big-time negative free cash flow due to operating losses and capex, no dividends will be paid on this speculative name. Overall, the valuation picture has worsened, but the stock remains a trader’s paradise and is more like a call option rather than any kind of long-term value holding. I sharply disagree with the A valuation rating and even a C+ growth assessment seems ambitious. I do not recommend holding this stock as a core position.

Astra Space: Earnings, Valuation, Free Cash Flow Forecasts

Looking ahead, corporate event data from Wall Street Horizon show a confirmed Q4 2022 earnings date of Thursday, March 30. The calendar is light on volatility catalysts aside from the earnings date.

Corporate Event Risk Calendar

The Technical Take

Back in November, I detailed a technical opinion that ASTR had some emerging positive indicators, but that traders should have a stop under $0.50. Indeed, shares fell below that mark, bottoming near $0.40. While just a dime, that’s a 20% drop, which is substantial. What does the situation look like today? I think there is more room for ASTR to run so long as $0.50 holds again. Notice in the chart below that shares had some bullish volume come in earlier in the month as the RSI momentum indicator surged to its highest level in years. What’s encouraging is that ASTR managed to rebound after a natural throwback into the $0.50s – on both price and RSI.

I would like to see the stock rise above a downtrend resistance line to help confirm a bottom. If that happens, $1.20 is the next resistance level, along with the falling 200-day moving average – currently at $1.34.

Overall, ASTR could be putting in a bearish to bullish rounded bottom reversal. Long with a stop again under $0.50 makes sense.

ASTR: Shares Tag the 50-Day, Eye New Rebound Highs

The Bottom Line

I continue to like ASTR as a flier-type speculative trade. With a recent breakout on better volume and RSI, shares could rise to near $1.20 in the coming weeks and months. Keep your eye on the March earnings date for heightened volatility.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.