NEW YORK: If you know nothing about what’s happening kilometres above the clouds, maybe you should.
While investors prefer sectors with nearer-term benefits, space is an area Morgan Stanley anticipates will see “significant development.” Several recent events support the potential to transition investments in the global space economy from what is mostly the private equity domain to the public equity domain, writes a Morgan Stanley team of analysts, including Adam Jonas and Rajeev Lalwani, in an August 23 note.
These developments include: Space Force potentially becoming the sixth branch of the US Armed Forces; Nasa announcing crews for manned flights to the International Space Station on US rockets; rapidly developing space capabilities from China; rising concerns about Russia’s satellite manoeuvers; a number of aeroplane-borne rocket launchers becoming prevalent, and more.
Space is a more than US$350 billion economy, Jonas says, but the industry has room to expand to US$1.1 trillion by 2040. The charge is being driven by national security and, more specifically, “tech communications,” with an upward lift from wireless data usage.
Two-thirds of Morgan Stanley’s revenue forecast is derived from the Internet, consumer broadband and ground equipment markets, Jonas wrote in an earlier note, which was reconfirmed by Bloomberg News. All of these underscore Jonas’ call on 20 stocks poised to leverage the growth of the global space sector: Adobe, Alphabet Inc., Analog Devices, Amazon.com Inc., Apple Inc., Boeing, Facebook Inc., GoDaddy Inc., Honeywell, Inmarsat, Intuit, Lockheed Martin, Microsoft Corp. Northrop Grumman, Qualcomm, SES, Shopify, Softbank, United Technologies, XL Group.
“Add the mounting number of developments and commentary from governments on the subject, and we believe investors cannot be too early in at least understanding this rapidly evolving topic,” Jonas wrote in the October 2017 note.