Analysis: Commercial Becoming More And More Important For DigitalGlobe

Back in September, I thought DigitalGlobe (DGI) was a good name for growth-oriented investors to check out, as I thought synergies from the GeoEye merger and growing commercial use of satellite imagery and data could fuel a long run of above-average growth. Shares have certainly cooperated since that mid-September report, with DigitalGlobe shares up about 18% and trouncing the S&P 500.

Whenever a stock more than doubles the return of the market over a 12-month period, it certainly makes valuation a valid question. I wouldn't say that DigitalGlobe is an inarguable bargain at today's price, but many large potential customers are stepping up their commitment to growing businesses that rely on satellite data. I do worry that sell-side analysts are playing the "the price has reached my target ... so it's time to raise the target" momentum game, but a long-term free cash flow outlook still suggests meaningful opportunity

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