Markets

Why DigitalGlobe, Inc. Stock Fell as Much as 11.8% Today

Specifically, analysts at JP Morgan downgraded DigitalGlobe stock from "Overweight" to "Neutral" this morning, and simultaneously lowered their per-share price target on the satellite imagery specialist from $30 to $27. Even so, keep in mind that lowered target would still offer a hefty premium over yesterday's closing price of $20.65 per share, and is 42% above DigitalGlobe's current trading price at around $19 per share.

What: Shares of DigitalGlobe fell as much as 11.8% early Thursday, then closed the day down 8%, following a notable analyst downgrade.

So what:

Now what: The downgrade also came despite a positive -- albeit largely expected -- press release from DigitalGlobe this morning, with which it announced the U.S. National Geospatial-Intelligence Agency (NGA) has renewed its Global Enhanced GEOINT Delivery program under the EnhancedView contract beginning this month.

But it also doesn't help that DigitalGlobe is still reeling from the company's most recent quarterly report, in which it beat analysts' expectations , but warned of "somewhat moderated" top-line growth in the second half of the year. According to DigitalGlobe CEO Jeffrey Tarr, to blame was their decision to avoid selling their highest quality 30cm imagery to some larger location-based services (LBS) customers at rock-bottom prices. To be sure, the nature of those customers' products -- including satellite views for web-based mapping services -- would mean making this unique imagery freely available on the web, which would undermine DigitalGlobe's value proposition to higher-margin customers in other verticals.

I've already made clear my personal view this was a prudent, long-term-oriented move by DigitalGlobe management. And it's worth noting with the help of DigitalGlobe's outperformance in Q2, the company was able to reiterate its prior outlook for 2015 revenue of $725 million to $750 million, and adjusted EBITDA of $355 million to $375 million. For perspective, mid-point of the former range sits well above analysts' current consensus estimates for 2015 revenue of $728.6 million. In the end, if DigitalGlobe manages to continue its streak of under-promising an over-delivering, I think this drop could be a great opportunity for long-term investors to step in.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Why DigitalGlobe, Inc. Stock Fell as Much as 11.8% Today originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends DigitalGlobe. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks

Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More