- The Washington Times - Monday, January 19, 2004

President Bush’s ambitious plans for outer space may have given shares of Orbital Sciences Corp. a lift last week, but analysts say the proposal is too uncertain to translate into near-term profits for the Sterling, Va., aerospace contractor.

The rocket manufacturer’s stock rose 3 percent last week on the New York Stock Exchange, where Orbital’s shares closed Friday at $13.28. U.S. financial markets were closed yesterday for the Martin Luther King holiday.

President Bush last week asked Congress to spend $12 billion to increase space missions and called for Americans to return to the moon by 2015 and establish a permanent station there.

But the plan is not a certainty, said Brian Gesuale, a senior research analyst at Minneapolis investment bank Piper Jaffray & Co. Inc.

“The general way to look at [the presidents speech] is it’s an ambitious and grand plan but not definite,” Mr. Gesuale said.

Orbital spokesman Barron Beneski said his company was “certainly excited about being involved in the space exploration mission, but a lot of things will need to happen before that vision moves forward.”

Mr. Beneski attributed the stock’s recent gains to a change in operations, a restructuring of debt and a steady stream of revenue.

The company posted a deeper loss in its most recent quarter, mainly because of a one-time, $38.8 million charge against earnings related to the cost of refinancing its debt.

Orbital lost $30.2 million (64 cents per diluted share) in the third quarter ended Sept. 30 compared with net income of $1.6 million (4 cents) a year earlier. Diluted earnings per share include the value of convertible warrants and stock options.

Orbital expects the debt restructuring to result in a one-time, non-cash gain of $40 million in its fourth-quarter results, which will be released in mid-February.

“It all nets out for the year,” Mr. Beneski said, adding that Orbital plans to record $570 million to $580 million in revenue for fiscal 2003. The company forecasts 2003 net income of 25 cents to 35 cents per share.

Mr. Gesuale thinks the company will outperform the overall market this year and predicts stronger sales in fiscal 2003 will accelerate revenue in 2004 to $637 million and earnings to 63 cents per share.

“The company has made a lot of good decisions in the last year,” Mr. Gesuale said, citing the sale of some business units and an increase in business from the Pentagon’s missile-defense program.

Mr. Gesuale does not own any Orbital shares and Piper Jaffray does not have a banking relationship with Orbital.

Paul Nisbet, an aerospace analyst with JSA Research Inc. of Newport, R.I., said Orbital “could conceivably” be out of debt by the end of the year because of changes made in the company’s balance sheets.

“They are very well disciplined this year and have hunkered down to smaller, more profitable company versus being a larger one in the business of commercial service satellites,” Mr. Nisbet said.

Mr. Nisbet, who rates Orbital a “buy,” does not own any Orbital shares and JSA Research does not do any business with the company.

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