Morgan Stanley | Europe is under increasing pressure to upgrade its space capabilities, with more investment needed if it wants to reduce its high dependence on players such as SpaceX.
In the report, analyst Terence Tsui discusses the CAPEX implications if the current European IRIS2 plan were to increase from 300 satellites for the next decade to more than 1,000 units at a cost of €10-50 billion.
Overall, this would mean sustained high CAPEX for European operators, although this could be partially mitigated by more public funding. For the A&D sector, space is an attractive growth area, but the current competitive environment in the industry is not very efficient, given its fragmentation.
Terence therefore highlights the importance of consolidation to improve the situation, noting that companies such as Airbus (OW), Thales (EW) and Leonardo (OW) are already in talks to create agreements in their satellite divisions.
Airbus, Overweight, Target Price £195 per share.
