Geoeye Inc. Com (GEOY)

[johnsyn]

GEOY on the Move Weekly Update, Dec 14, GAMECHANGERS
GeoEye (GEOY) has come to life in recent days, bouncing more than 20% from its lows around $18 last Thursday to today’s close of $21.80. There haven’t been any major announcements, but there are a couple of factors at work here. First, keep in mind that industry publications have said the company is exploring strategic alternatives – Wall Street speak for “up for sale” and ready to be shopped around. There could be a potential suitor kicking the tires or rumors of a new contract leaking out. Those can be lucrative and change the valuation of the company.

In what could be a related development, GeoEye changed its corporate bylaws, increasing to 25% (from 20%) the amount of outstanding stock that “a person or group of affiliated or associated persons may beneficially own before becoming an Acquiring Person [italics mine].” This looks to be confirmation that the company is pretty serious about a sale. I still believe we would see any deal at a substantial premium to current prices. The stock tends to fly under the radar (literally and figuratively), and the sale of GEOY to a strategic or financial buyer doesn’t seem to be built into the current price.

I will keep my ear to the ground and let you know what I hear. I still see value here, and I recommend you buy GEOY under our revised limit of $23.