MDA Space stock has suffered a harsh reversal: is it a buy now?

The MDA Space stock price slumped by 10% on Tuesday, moving from a low of $28.40, its lowest level since March 5. It has dropped by 13% from its highest point this year, giving it a market capitalization of over $3.7 billion.

MDA Space stock slipped after a key update on NASA

The MDA share price has slumped in the past few days as investors focused on the ongoing changes at NASA’s Artemis mission. 

NASA has announced that it intends to pause Gateway in its current form and shift focus to infrastructure that enables sustained Lunar surface operations.

In a statement, the company said that its Canadarm3 program, which is associated with Artemis, was a contract with the Canadian Space Agency and not with NASA or with the US government. As a result, the company believes that its business will not be impacted by the changes at NASA. The statement added:

“We are in continuous dialogue with the Canadian Space Agency and expect that Canada will continue to contribute robotics technology to the Artemis mission."

Revenue growth continues

The most recent results showed that MDA Space business continued to do well in the fourth quarter of last year.

Its revenue jumped by 44% in the fourth quarter to $499 million. This revenue brought its annual revenue to over $1.65 billion, up by 51% from a year earlier.

The company’s adjusted EBITDA also continued growing in the fourth quarter, reaching $324 million last year, up by 49% YoY. This growth happened as the adjusted EBITDA margin rose to 19.8%.

Its net profit also continued growing last year, with the net income rising by 71% YoY to over $190 million. 

The management believes that the company will continue growing this year, with the revenue expected to come in between $1.7 billion and $1.9 billion. Its adjusted EBITDA margin is expected to be between 18% and 20%.

Most notably, the company is increasing its focus on the defense industry, which is expected to keep growing in the coming years, as global tensions rise. 

In a recent statement, the company said that it received a $32 million order from the Canadian Department of National Defense. The deal will see it deliver ground-based optical capabilities for space surveillance. This order came as the backlog jumped to $4 billion, while its pipeline moved to over $40 billion.

MDA Space stock price technical analysis 

MDA Space stock chart | Source: TradingView 

The daily timeframe chart shows that the MDA Space share price has jumped from a low of $15 in November last year to a high of $33.72 this month.

This surge stalled this month after forming a small double-top pattern at $33.72 and a neckline at $30. A double-top is one of the most common bearish reversal signs in technical analysis.

On the positive side, there are signs that the stock has formed an inverted head-and-shoulders pattern, a common bullish reversal sign in technical analysis. It has also formed a cup-and-handle-like pattern, a common bullish sign.

The MDA Space stock price remains above all moving averages, a sign that bulls remain in control. Therefore, the stock will likely maintain its volatility in the near term and then resume the uptrend. 

If this happens, the stock will likely rebound and hit to the key resistance level at $33.72. A move above that level will point to more gains, potentially to the all-time high of $35.27.

READ MORE: RKLB, LUNR, and RDW soar on Trump’s Mars plans: what investors need to know about space stocks