Wedbush urges buy of Planet Labs after earnings dip

Wedbush analyst Dan Ives recommended buying Planet Labs shares following a post-earnings decline. Planet Labs reported a record first-quarter revenue of $94.2 million and issued full-year adjusted EBITDA guidance of breakeven to $10 million. The guidance coincided with a drop in the stock after a period in which the shares had risen more than 65% year to date.

In the quarter the company reported a backlog of $906 million, driven in part by a 65% year-over-year increase in Defense & Intelligence contracts and a 72% rise in backlog versus the prior year. The company said many of those orders are with government and sovereign customers.

Planet Labs has been shifting capital from raw imagery sales toward AI-enabled analytics and downstream data products. The company shipped its Pelican-11 demonstration satellite to a SpaceX launch site this week as part of work on its next-generation constellation. Management has said the shift to higher-value services will affect near-term adjusted EBITDA while aiming to expand product margins over time.

Financial metrics highlighted by Wedbush include a Net Dollar Retention rate of 113% and about $731 million in cash on the balance sheet. Options-market data for contracts expiring in mid-August showed a put-to-call ratio near 0.42 and an upper strike around $42.49, which implies more than 25% upside under certain scenarios.

Technical measures cited included a relative strength index in the mid-30s and the stock trading near its 100-day moving average. Wall Street consensus currently lists the shares with a moderate buy rating and a mean price target near $35.36, which implies roughly 9% upside from recent levels.

The market reaction reflected the contrast between the company’s near-term margin guidance and the expanding defense and intelligence pipeline along with its transition to AI analytics. Wedbush identified the post-earnings pullback as a buying opportunity based on the backlog, cash position and product strategy.