Jefferies downgraded shares of Redwire to Hold from Buy, arguing that the space infrastructure company's sharp stock rally has largely priced in its bullish growth outlook, leaving limited near-term upside despite strong industry tailwinds.
The brokerage raised its price target to $24 from $13 but noted that Redwire shares have surged more than 220% year-to-date, driven primarily by valuation expansion rather than changes in financial expectations. Jefferies said enthusiasm surrounding the broader space sector, including anticipation of a potential SpaceX IPO, has boosted sentiment and multiples across the industry.
While Jefferies remains constructive on Redwire’s long-term prospects, citing opportunities across its space components business, defense technology portfolio and emerging in-space manufacturing and biotech initiatives, it believes the company’s current valuation already reflects a bull-case scenario. The firm forecasts revenue to grow at an 18% compound annual rate over the coming years but expects adjusted EBITDA to remain negative in 2026.
Redwire generated strong order momentum in the first quarter, posting a book-to-bill ratio of 1.92 times and benefiting from recent acquisitions, including Edge Autonomy. Jefferies projects revenue of roughly $480 million in 2026, up 43% from 2025 levels, supported by backlog conversion and defense technology growth.
The brokerage highlighted several growth drivers, including next-generation spacecraft platforms, large-scale space infrastructure projects, microgravity pharmaceutical development through its SpaceMD initiative, and expanding unmanned aerial systems offerings from Edge Autonomy.
However, Jefferies cautioned that profitability remains a key hurdle. The firm expects Redwire to post an adjusted EBITDA loss of $13.3 million in 2026 before turning positive in 2027, with elevated research and development spending continuing to weigh on margins.
Jefferies said future share gains will depend on management’s ability to convert backlog into revenue, improve margins and execute on growth initiatives, adding that the stock’s current valuation leaves little room for disappointment.
source https://www.investing.com/news/stock-market-news/redwire-cut-to-hold-as-valuation-outpaces-fundamentals-says-jefferies-4719870
