Technology

Space Odyssey: The Renewed Race in Orbit and Beyond

By: Roman Schweizer, Cai von Rumohr CFA, Gautam Khanna, Jack Ayers CFA, Liz Huseynov, Spencer Breitzke

Dec. 24, 2024 - 2 minutes 30 seconds

Two engineers in white coats looking over data on a tablet computer in a tech lab.

Overview:

National security threats are driving significant U.S. government spending.
The U.S Government space launch segment continues to be dominated by one company, but others face key tests next year.
Defense primes face robust competition from new entrants and questions about Low Earth Orbit satellite profitability.
Dynamic space operations and on-orbit services are the next large market, with Department of Defense/National Aeronautics and Space Administration (NASA) interest in concepts and technology.

The TD Cowen Insight

A renewed space race presents civil, military and commercial opportunities. U.S Government (USG) spending is boosted by military threats and renewed interest in exploration. The USG market will continue to see growth and competition influenced by commercial tech and new entrants.

USG space comprises of numerous segments, but we've concentrated on three key sectors. While the incumbent has a scale advantage, there is competition.

Three Key Opportunities

This report focuses on three important areas that we think will present opportunities over the next five to 10 years. The first two are large growing markets; launch and Low Earth Orbit (LEO) satellites. Another key area is a developing market that will benefit from USG interest; on-orbit operations. There are near-term catalysts in 2025, and the Trump Administration could alter the trajectory of USG space policy for the Department of Defense and NASA, in addition to spending.

The opportunity and risk for national security, civil and commercial space is massive. Threats from Russia and China will continue to drive USG policy and spending, and augment commercial industry wherever it can. The space "market" is difficult to frame and offers multiple themes.

Quantifying Spending Forecasts

This report is a collaborative analysis between the TD Cowen Aerospace and Defense equity and policy analysts. We've used our proprietary Athena database to quantify spending forecasts and program spending, then supplemented it with discussions from thought leaders in the space market.

Five Year Growth Outlook

We expect three USG market segments to grow significantly over the next five years, but the new Trump Administration and Congress will play the key role in setting that range. While the USG launch segment has been dominated by one company, competitors could finally emerge in the coming year. In the LEO satellite market, major awards in 2025 could establish leaders. In our opinion, USG driven On Orbit Servicing (OOS) should become the next major growth area.

What To Watch

Trump administration space policy and five-year spending plan for NASA and The Department of Defense,
Completion of FY25 appropriations and FY26 budget release,
NASA's plans for Artemis and the Space Launch System,
Department of Defense Lane 2 launch contracts,
Blue Origin New Glenn first launch and DoD certification,
RocketLab Neutron first launch mid-2025,
SDA LEO T1 launches, T2 execution and T3 awards,
USSF Dynamic Space Ops concepts and demonstrations.

Subscribing clients can read the full report, Space Odyssey: The Renewed Race in Orbit and Beyond - Ahead Of The Curve Series, on the TD One Portal

Disclaimer

The views or opinions expressed herein represent the personal views of the writer and do not necessarily reflect the views of TD Securities or its affiliates.

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Roman Schweizer

Managing Director, Washington Research Group - Aerospace & Defense Policy Analyst, TD Cowen

Roman Schweizer
Managing Director, Washington Research Group - Aerospace & Defense Policy Analyst, TD Cowen

Biography

Roman Schweizer joined TD Cowen Washington Research Group in August 2016 covering defense policy issues. He held previous positions at Guggenheim Securities and MF Global. TD Cowen Washington Research Group was recently named #1 in the Institutional Investor Washington Strategy category. The team has been consistently ranked among the top macro policy teams for the past decade. Mr. Schweizer has over 15 years of experience in Washington, DC, serving as a government acquisition official, industry consultant, and journalist.

Prior to joining Washington Research Group, he was an acquisition professional with the U.S. Navy’s littoral combat ship program. Previously, he directed a team providing congressional and media strategic communications support to senior Navy officials on high-profile ship acquisition programs. Mr. Schweizer has also consulted on U.S. and international defense, aerospace, homeland security, and technology market sectors to Fortune 100 clients on behalf of DFI International and Fathom Dynamics LLC.
He has been published in Inside the Navy, Inside the Pentagon, Armed Forces Journal, Defense News, ISR Journals, Training and Simulation Journal, the Naval Institute’s Proceedings, and the Navy League’s Seapower.

Mr. Schweizer earned a bachelor’s degree in history from American University in Washington, DC.
Material prepared by the TD Cowen Washington Research Group is intended as commentary on political, economic, or market conditions and is not intended as a research report as defined by applicable regulation.

Cai von Rumohr

Managing Director, Industrials - Aerospace, Defense Electronics & Government Services Research Analyst, TD Cowen

Cai von Rumohr
Managing Director, Industrials - Aerospace, Defense Electronics & Government Services Research Analyst, TD Cowen

Biography

Cai von Rumohr is a managing director and senior research analyst specializing in the aerospace industry. Mr. von Rumohr has followed the aerospace industry since 1969 and has been named to Institutional Investor’s “All-America Research Team” 29 times since its inception in 1972. Mr. von Rumohr was ranked by Institutional Investor as the top analyst in aerospace for nine years and in defense electronics for two years. He was named to the All-America Research Team Hall of Fame in 2011. Mr. von Rumohr is a member and past president of the Aerospace Analysts’ Society of New York and has taught the aerospace industry portion of the Boston Society of Security Analysts’ courses on analysis. He is also a life trustee of the Corporation of the Rivers School in Weston, Massachusetts. He received a BA from Harvard College and an MBA from Harvard Business School. He is a CFA charterholder.

Gautam Khanna

Managing Director, Industrials - Aerospace, Defense Electronics & Government Services Research Analyst, TD Cowen

Gautam Khanna
Managing Director, Industrials - Aerospace, Defense Electronics & Government Services Research Analyst, TD Cowen

Biography

Prior to rejoining TD Cowen in 2006, Gautam Khanna was an analyst at Citadel Investment Group. He also has worked at Charles River Associates as a management consultant to the aerospace and defense industry. Mr. Khanna has a BS in foreign service from Georgetown University and an MBA from MIT.