With retiredLockheed Martin CEO Norman Augustine headed to Capitol Hill next week to testify on his review panel’s options for the U.S. human spaceflight program, Alliant Techsystems is trying to put a good spin on the potential cancellation of NASA’s Ares I crew launch vehicle.
The company, which is the prime contractor on the solid-fuel first-stage booster, maintains that it would be positioned to win a major role on whatever replaced Ares. “My sense of it is there’s quite a bit more opportunity than risk,” chairman and CEO Daniel Murphy told Wall Street analysts in an earnings call last month.
But investors aren’t buying that logic. Speculation that the Augustine panel wouldfind Ares unaffordable within NASA’s constrained budget has helped send Alliant’s stock down about 17% from more than $90 in early June to less than $75.
While the company “should continue to be involved in any human space flight effort, a decision to abandon all or part of the Constellation program, specifically Ares I, would have significant consequences for the company’s growth profile over the next few years,” says J.P. Morgan analyst Joseph B. Nadol, 3d.
While the Augustine panel’s recommendations will carry a lot of weight, the final call on Ares’s future rests with the White House. But even if the Obama administration ultimately does scuttle the development, Alliant’s stock isn’t likely to nosedive. “We believe most of the bad news [already] is priced in,” Nadol says.