MORGAN STANLEY: Here are 20 companies that are best exposed to the growing space economy

MORGAN STANLEY: Here are 20 companies that are best exposed to the growing space economy

Boeing (BA)

Sector: Aerospace and Defense

Reasoning (if provided): "Boeing participates most heavily in the satellite and launch components of the space value chain. The company caters to a host of end-customers, from commercial companies seeking communication satellites (ViaSat) to sensitive US Government entities seeking classified capabilities (X-37). The company provides launch through the United Launch Alliance joint venture with Lockheed Martin"

Stock price: $262.29

YTD growth: 66.94%

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Data provided by Morgan Stanley

Softbank

Sector: Telecommunications services

Reasoning: "Softbank has invested $1b in OneWeb, and, with the Vision Fund, has the potential to put more capital to work in this area"

Stock price: 9840 yen

YTD growth: 23.29%

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Data provided by Morgan Stanley

Microsoft (MSFT)

Sector: Software

Reasoning: Microsoft would stand to benefit from more internet users.

Stock price: $77.08

YTD growth: 35.74%

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Data provided by Morgan Stanley

XL Group

Sector: Property and Casualty Insurance

Reasoning: "XL Group is one of the top underwriters of space insurance, providing insurance coverage for launch and in-orbit events. We see room to grow this line of business, as launches become more frequent, and there is a higher probability of potential damage that could occur while in-orbit. Due to the unique nature of this line, XL can apply their expertise to underwrite more profitably than its space insurance competitors."

Stock price: $40.64

YTD growth: 8.91%

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Data provided by Morgan Stanley

Adobe (ADBE)

Sector: Software

Reasoning: Adobe would stand to benefit from more internet users.

Stock price: $154.01

YTD growth: 48.04%

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Data provided by Morgan Stanley

Apple (AAPL)

Sector: IT Hardware

Reasoning: Apple would stand to benefit from more internet users.

Stock price: $156.31

YTD growth: 35.27%

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Data provided by Morgan Stanley

United Technologies (UTX)

Sector: Multi-technology

Reasoning: "United Technologies' Aerospace System business is a prime contractor of NASA's space suit / life support system. The company also produces environmental control, life support, power management and distribution, and thermal control systems for the International Space Station and the Orion crew exploration vehicle"

Stock price: $118.76

YTD growth: 7.53%

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Data provided by Morgan Stanley

Intuit (INTU)

Sector: Software

Reasoning: Intuit would stand to benefit from more internet users.

Stock price: $145.66

YTD growth: 26.90%

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Data provided by Morgan Stanley

Honeywell International (HON)

Sector: Multi-industry

Reasoning: "Honeywell is a leader in avionics, thermal control, environmental control and life support systems for the Human Space market, and has been part of every NASA manned space mission. The company also has a stronger expertise in developing and manufacturing satellite hardware for both military and commercial applications, and provides guidance, propulsion, steering and utility control systems for launch vehicles. Honeywell also acquired a satellite communication component manufacturer, Com Dev (~$160M Revenue) in 2015, which management believes is well positioned to benefit from rising demand for higher bandwidth and growth in the small satellite market"

Stock price: $143.72

YTD growth: 23.69%

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Data provided by Morgan Stanley

Alphabet / Google (GOOGL)

Sector: Internet

Reasoning: "Google has seven platforms with 1b+ users. We see rising internet penetration, bringing the next 3b+ people online and improving global internet connectivity, leading to stronger adoption and monetization of Google's products, including the Android ecosystem, paid search and YouTube."

Stock price: $1,006.98

YTD growth: 25.37%

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Data provided by Morgan Stanley

Facebook (FB)

Sector: Internet

Reasoning: "Facebook's revenue growth is driven by growth in users (now at 1.3b daily active users), engagement (now at ~55 minutes / user / day), and sophisticated data analytics / targeting to serve high quality content and ads to its users. As such, the ~2b current global internet users not on Facebook and 3b+ people not online are potential material drivers of long term growth."

Stock price: $146.19

YTD growth: 49.23%

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Data provided by Morgan Stanley

Amazon (AMZN)

Sector: Internet

Reasoning: "Amazon is the global e-commerce leader with operations in developed and developing countries. At a high level, increased global internet connectivity is likely to lead to rising e-commerce adoption, which will move more consumer dollars into Amazon's ecosystem."

Stock price: $1,002.71

YTD growth: 33.31%

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Data provided by Morgan Stanley

Qualcomm (QCOM)

Sector: Communications Systems and Applications

Reasoning: "Qualcomm is best positioned to make communication work across difficult spectrum challenges."

Stock price: $53.13

YTD growth: -18.77%

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Data provided by Morgan Stanley

Shopify (SHOP)

Sector: Software

Reasoning: "Shopify offers a platform that enables merchants to build and use online storefronts with little to no technology expertise required. The platform’s scalability, ease of use, and low cost has enabled the company to maintain the fastest growth rate among our global Software coverage universe. Low cost of failure offered by Shopify’s platform has been a catalyst for small entrepreneurs to pursue opportunities they otherwise never would have with economics that have also attracted large enterprises, further expanding its addressable markets. While Shopify has only recently targeted expansion into major international markets, pent up global demand for its platform is implied by adoption in emerging markets the company has not yet targeted or supported."

Stock price: $94.68

YTD growth: $121.24

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Data provided by Morgan Stanley

GoDaddy (GDDY)

Sector: Software

Reasoning: "GoDaddy is focused on providing technology to enable web presence for small to medium sized businesses and is the largest scaled vendor in markets with low barriers to entry and high barriers to scale. The company estimates that over 50% of SMBs in the U.S. do not have a web presence with this number increasing to 70% globally. In addition to its scale, GoDaddy’s competitive advantages include better breadth, functionality, and reliability relative to its peer group. While performance in the U.S. remains stable, international expansion into underserved geographies remains a substantial opportunity for incremental growth and profitability"

Stock price: $44.34

YTD growth: 24.22%

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Data provided by Morgan Stanley

Inmarsat

Sector: Satellite

Reasoning: "Inmarsat is a traditional mobile satellite services operator specializing in connectivity services for those in remote areas. There are opportunities and risks from the latest space developments. On the one hand, we see a higher risk of new entrants, which is evident with Viasat becoming a serious competitor in in-flight connectivity. On the other hand, the demand for connectivity ought to be advantageous to Inmarsat's core maritime business, where the barriers to entry are higher (for example, development of drone ships for long haul maritime routes)."

Stock price: 6.39

YTD growth: -13.77%

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Data provided by Morgan Stanley

Northrop Grumman (NOC)

Sector: Aerospace and Defense

Reasoning: "Northrop Grumman participates in the development and manufacturing of both satellite payloads (the sensor system for SBIRS), as well as full up satellites (for example, JWST). With the recently announced acquisition of Orbital ATK, the company stands to add launch to its capability set, as well as extend its satellite business to smaller platforms."

Stock price: $297.54

YTD growth: 26.76%

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Data provided by Morgan Stanley

SES Global

Sector: Satellite

Reasoning: "SES is the world's second largest fixed satellite services operator, with operations around the world. The company has 12 medium Earth orbit (MEO) satellites in service, plans to launch 8 satellites in 2018 / 2019, and 7 super power satellites from 2021"

Stock price: $16.49

YTD growth: -21.68%

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Data provided by Morgan Stanley

Analog Devices (ADI)

Sector: Semiconductors

Reasoning: "Analog Devices has modest exposure, with RF and microwave products in satellites (including LEO satellites) representing low to mid single digit % of company sales"

Stock price: $89.45

YTD growth: 23.33

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Data provided by Morgan Stanley

Lockheed Martin (LMT)

Sector: Aerospace and defense

Reasoning: "Lockheed Martin participates across all segments of the value chain, including satellites (AEHF), launch (United Launch Alliance), and ground systems. The company primarily caters to the US government with exposure to NASA and the DoD amongst others. In recent years, the company has made several investments focused on space, including a $300M refresh of its family of satellites concluded in 2017"

Stock price: $320.23

YTD growth: 26.49%

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Data provided by Morgan Stanley