Shares of Planet Labs PL have gained 87.5% year to date, outperforming the industry, its sector as well as the Zacks S&P 500 composite.
Planet Labs is a leading provider of Earth-imaging data and geospatial analytics, operating the largest fleet of Earth-observation satellites globally.
PL stock has moved above its 50- as well as 200-day simple moving average (SMA), signaling a bullish trend. The 50-day and 200-day SMAs are key indicators for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first markers of an uptrend or downtrend.
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Shares of Rocket Lab RKLB and BlackSky Technology BKSY have gained 18.3% and 89.3% year to date, respectively.
PL Shares Are Expensive
The stock is overvalued compared with its industry. It is currently trading at a price-to-sales multiple of 27.52, higher than the industry average of 2.49 and above the median of 3.65 over three years.
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PL is relatively cheap compared to RKLB but expensive compared to BKSY.
The Case for PL Stock
Planet Labs derives the majority of its revenues from a combination of fixed-price subscription agreements and usage-based contracts, delivering satellite imagery and data analytics through its cloud-based platform to government entities and large enterprises. Growth has been driven by the continued development of its subscription model, increasing demand from government clients, and a strategic shift toward higher-value satellite services and advanced analytics solutions.
In recent years, the company has increasingly focused on securing large-scale government and defense contracts, which provide greater revenue visibility and longer-term stability. While this segment remains a primary growth engine, management still considers the commercial market a significant long-term opportunity. Continued improvements in Planet Labs’ offerings are expected to drive broader adoption among commercial users. Notably, the expansion of AI-powered analytics—initially developed for government applications—is expected to unlock new commercial use cases such as supply chain monitoring, surveillance, operational optimization, insurance risk assessment, financial analysis, energy management, and agriculture.
As of fiscal 2026, the company reported a backlog of $900 million, up 79% year over year, supporting expectations for accelerated revenue growth. The year also marked Planet Labs’ first achievement of adjusted EBITDA profitability.
For fiscal 2027, management forecasts revenues in the range of $415 million to $440 million, implying approximately 39% year-over-year growth at the midpoint. Gross margins are expected to be between 50% and 52%, with adjusted EBITDA projected to range from breakeven to $10 million.
Despite these positive indicators, Planet Labs remains unprofitable, with no near-term turnaround anticipated. Ongoing investments in satellite development, deployment, and replacement continue to weigh on margins. The company also faces high research and development costs due to the complexity of its technology, along with elevated sales, marketing, and administrative expenses. Having reported losses over the past five years, Planet Labs is expected to remain in the red through fiscal 2027. Additionally, returns on equity and invested capital remain below industry averages, highlighting continued execution challenges and profitability concerns.
Muted Analyst Sentiment
The Zacks Consensus Estimate for fiscal 2027 revenues indicates a 39.4% year-over-year increase, while that for earnings is expected to be flat year over year. The consensus estimate for fiscal 2028 revenues indicates a 32.2% year-over-year increase, while that for earnings suggests an increase of 266.7% year over year.
The consensus estimate for fiscal 2027 earnings witnessed no movement in the past 30 days.
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The consensus estimate for 2026 earnings of RKLB has moved south in the past 30 days, while that for BKSY has witnessed no movement in the same time frame.
Parting Thoughts on PL Shares
Planet Labs, a data-driven company focused on Earth-observation imagery and analytics, is poised to grow, given the rising global demand for commercial satellites.
However, current factors warrant caution. With the stock trading at a premium, returns on capital comparing unfavorably with the industry, looming near-term earnings pressure, muted analyst sentiment and a VGM Score of F, it is better to stay cautious on this Zacks Rank #3 (Hold) stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Planet Labs PBC (PL): Free Stock Analysis Report
Rocket Lab Corporation (RKLB): Free Stock Analysis Report
BlackSky Technology Inc. (BKSY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).