Despite Blocked Space Division Deal, MacDonald Detwiler Beats Consensus

Strip away the messy politics that MacDonald Dettwiler & Associates Ltd. (MDDWF.PK) has been immersed in for the past few months, and you’re left with a company primed for strong growth.

That, at least, is the opinion of two analysts weighing in on the company that saw the high-profile C$1.325-billion sale of its space division blocked last week in an unprecedented move by Industry Minister Jim Prentice.

On Monday, MDA announced first-quarter growth of 22% in net earnings over the same period in 2007, beating consensus estimates.

RBC Capital Markets analyst Steve Arthur wrote:

In our view, MDA again this quarter demonstrated the resilience of its diverse business model, posting strong results amid very difficult end-market conditions and massive distractions around the planned sale. We believe solid performance will continue, and accelerate as end market conditions [for itsr eal estate information business] improve in the U.K. and U.S.

Mr. Arthur calculated a C$57 price target, and rated MDA an outperform with above-average risk, noting that share weakness following the quashed deal leaves “over 45% upside to our target price, and we believe the risk/reward proposition remains very attractive.”

Fraser Mackenzie Ltd. analyst Paul Bradley similarly reinstated a strong buy recommendation on MDA, with a target of C$55.

However, he noted that the deal’s death stripped about C$1.2-billion in expected cash from MDA books, leaving it with a sizeable debt load of about C$500-million and quarterly interest payments that have risen from C$4.9-million to C$6.9-million.