Orbital May Benefit From SpaceX’s Fiery Rocket Fail, Cowen Says

Musk’s SpaceX Rocket Explodes Minutes After Liftoff

SpaceX’s explosive mission failure may benefit Orbital ATK Inc. as the two compete for future contracts to supply the International Space Station, according to Cowen & Co.

The fiery destruction of an unmanned cargo ship launched Sunday by Space Exploration Technologies Corp. was the third loss of vessels headed for the research center in less than a year. Both U.S. competitors have now suffered setbacks, as did a Russian Progress 59 craft.

The failure makes SpaceX and Orbital’s “respective track records more equal” ahead of the next competition to win further resupply missions in September, said Cowen analyst Gautam Khanna in a note to clients Monday.

Another benefit for Orbital could come from the National Aeronautics and Space Administration in the form of additional commercial resupply contracts, Khanna said. Extended missions appear more likely under the current deal even before the September competition, Khanna said. If awarded, it would make it easier to project Orbital’s earnings through 2017.

And NASA may try to pull forward one of Orbital’s scheduled resupply missions scheduled for later this year, to October from December, for example, Khanna said. That would benefit earnings before interest and taxes and cash flow sooner, he said.

“We see the stock grinding to $86 within a year, with potential to overshoot,” if the company meets its goals, Khanna said.

Orbital fell 0.7 percent to $75.28 at 10:25 a.m. in New York as broader indexes also tumbled. The Dow Jones Industrial Average was down 0.8 percent.

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