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Research and Analysis

Index Performance: Third Quarter Rebounds After Second Quarter Losses

11/02/2012

The third quarter of 2012 saw a broad market rebound from the losses in the second quarter. The Space Foundation Services Index led the way with a fast-paced 18 percent growth rate. Along with the Space Foundation Index, it outperformed the Space Foundation Infrastructure Index, the S&P 500 Index, and the NASDAQ Composite as can be seen in Exhibit 1.

Key movers in the third quarter of 2012:

  • GeoEye outperformed all other Index components, with more than 70 percent growth in its market capitalization, in part due to the July announcement that the company would be acquired by DigitalGlobe for $900 million. The market also rewarded DigitalGlobe with a 35 percent increase for the quarter.
  • Globalstar's stock reversed course in September (up 50 percent) with positive announcements that helped clear the way to continue its satellite launches. The first news was that the company had signed an agreement with Thales Alenia Space for the construction of six new satellites and an option for up to 24 more. The second announcement was that Globalstar had resolved a payment dispute with its launch provider, Arianespace.
  • GenCorp (up 47 percent) was buoyed by news in July that it would acquire Pratt & Whitney's Rocketdyne unit for $550 million, effectively doubling the company's size when the acquisition closes in 2013.
  • Sirius XM performed very well, with more than 40 per cent growth as it reported that net subscriber growth for the second quarter was up 38 per cent over 2011. Another significant driver for the jump in stock price was the news that Liberty Media was selling assets to raise cash for the takeover of Sirius XM.
  • Computer Sciences Corporation (up 30 percent), Gilat (up 27 percent) and Harris (up 21 percent) led the remaining index components in growth for the quarter.
  • Iridium slipped the most in the third quarter (down 17 percent) but was one of only four Index components that lost ground in an otherwise strong quarter for the space industry. Iridium reported slightly lower earnings for the second quarter and lowered its guidance for the year.

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