What BofA’s Underperform Rating Means for Redwire (RDW) Investors

Redwire Corp. (NYSE:RDW) is one of the best emerging technology stocks to buy right now. The company develops space infrastructure technologies, including deployable structures, satellite power systems, and in-orbit manufacturing. The company has also advanced research in 3D bioprinting in microgravity, highlighting its role in the growing space economy.

Despite these strengths, Redwire Corp. (NYSE:RDW) shares have fallen 47% year-to-date. Analysts see potential for recovery and the broader consensus suggests over 100% potential upside for the stock. However, questions surrounding growth visibility and shareholder actions have added caution.

What BofA’s Underperform Rating Means for Redwire (RDW) Investors

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On August 18, Bank of America analyst Ronald Epstein started coverage of Redwire Corp. (NYSE:RDW) with an Underperform rating and a $10 price target. He cautioned that the company relies heavily on government space contracts, which limit its growth potential. Epstein also flagged earnings volatility, dependence on acquisitions, and its concentrated ownership as added risks compared to other space and defense tech peers.

Among the key concerns for Epstein is Redwire’s ownership structure. Following the Edge Autonomy deal and a capital raise, two private equity firms now collectively hold approximately 87% of the company’s shares. These investors have also signaled plans to sell a large chunk of their stake, reportedly over 75%, in the future. According to Epstein, such heavy insider selling could weigh on the stock price and make it harder for Redwire Corp. (NYSE:RDW) to raise new funds, adding further uncertainty for investors.

Redwire Corp. (NYSE:RDW) supplies space infrastructure and high-reliability components for the emerging space economy. The company holds key intellectual property in areas such as solar power systems and in-space 3D printing and manufacturing.

While we acknowledge the potential of RDW to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than RDW and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.