Buy or sell? Deutsche Bank, BASF, Kleos Space in analyst check

Kleos Space: 400% share price opportunity and jump in sales in 2023

First Berlin recommends buying Kleos Space's stock with a target price of AUD 1.60. Currently, the shares of the Company, which specializes in space-based high-frequency reconnaissance, are trading at AUD 0.29 - it is also traded in Germany. Since the beginning of August, the share price has almost halved. This was due to write-downs on the first test satellite cluster and delays in rocket launches to get more clusters operational. Analysts expect Kleos to post its first positive operating result in the current second half of 2022. In addition, the Luxembourg-based technology company has secured AUD 10 million in debt financing from Australian funding boutique PURE Asset Management Pty Ltd. This could be used to finance one to two additional satellite clusters to drive revenue growth.

Kleos plans for satellite clusters two and three to be operational by the end of the year. By then, the fourth cluster will also be launched into space on a SpaceX rocket. Its commissioning is expected to occur in the first half of 2023. Accordingly, analysts expect Kleos' sales to climb from EUR 2.20 million to EUR 12.50 million in 2023. In 2024, this figure is expected to rise to EUR 20.20 million. Then, for the first time, a net profit of at least EUR 2 million should be achieved (to the complete study (more-ir.de/d/25391.pdf).

In order to achieve these sales estimates, orders from the US government are needed. To obtain them, Kleos is demonstrating the accuracy of its radio frequency (RF) geolocation data over land and water to the US National Reconnaissance Office (NRO). The NRO builds and operates the US government's space-based intelligence, surveillance and reconnaissance capabilities and provides satellite, signal and imagery data to government agencies. Eric von Eckartsberg, CRO of Kleos, said, "Our four-satellite-per-cluster approach has significant operational advantages, including increased resilience and risk mitigation compared to systems with fewer satellites. It allows us to acquire additional radio frequencies in each band and accurately detect transmissions even when the tracking or positioning system has been disabled or turned off. Our independent reconnaissance data can be used to validate or reference other commercial data sets to improve situational awareness."

BASF: Buy or sell?

Analysts are far from unanimous on BASF's share price prospects. Credit Suisse cites a price target of EUR 61 for the chemical giant's stock and recommends it with an "outperform" rating. The analysts expect the DAX-listed group to increase its operating result (EBIT) by an average of 11% by 2024. This is surprising because of the persistently high energy prices and because the analysts also expect a drop in demand for BASF products. Inventories would also have to be reduced further.

Due to the foreseeable difficult months, UBS recommends selling BASF shares. The price target is EUR 37. In the third quarter, the operating result of the DAX-listed group is unlikely to meet expectations, and the coming year at the latest will be challenging. Analysts believe it is likely that energy prices will remain high. Therefore, the analysts have reduced their estimates by 13% and are significantly more bearish than the average analyst. Goldman Sachs also sees no upside potential for BASF at present. Their price target is EUR 43 and the rating is "Neutral". The energy crisis will likely continue to plague the European chemical industry for at least the next two years. This could lead to lasting problems in global competition. BASF shares are currently trading at around EUR 42.

Deutsche Bank: EUR 11 or EUR 17.30?

Goldman Sachs is more optimistic about the price potential of Deutsche Bank shares. The analysts have a price target of EUR 17.30 for the security of the German industry leader. The valuation of many European banks is low, and the potential is correspondingly high. The Deutsche Bank share should benefit from higher interest rates and is therefore one of the sector favorites of the Goldman analysts - even if a recession threatens. RBC is considerably more pessimistic. The analysts have reduced the price target for the Deutsche Bank share from EUR 11.50 to EUR 11. Deutsche Bank would benefit from rising interest rates, but costs would also increase. In addition, the entire industry would face declining revenues in investment banking. Currently, the Deutsche Bank share is trading at around EUR 8.

At Kleos Space, orders from the US government could provide the breakthrough. At BASF, high energy costs and the threat of recession are causing concern. The share remains a hot potato. Deutsche Bank should benefit from rising interest rates, but the sector is also fraught with risks due to the ailing Credit Suisse.