Player Avatar TMFBlacknGold (98.64) Submitted: 5/31/2012 8:48:28 PM : Outperform Start Price: $18.54 GEOY.DL Score: +2.29

GeoEye is trading well below fair book value, which stands at $23.46 per share and represents a 23.5% premium to $19. The market has overreacted to the failed bidding between GeoEye and DigitalGlobe. If the companies merge in any way then GeoEye investors stand to profit - especially at these prices.

I don't think investors should worry about the possibility of declining revenue from the EnhancedView contract either. Any loss in revenue will easily be replaced with the launch of the company's next satellite, GeoEye-2, which features the sharpest resolution of any commercial satellite ever created.

Should investors worry about the smaller digital geospatial archive compared to its rival DigitalGlobe? Nope. Consider this: it took GeoEye 1.82 sq km to generate $1 in revenue in 2011. It took DigitalGlobe 6.48 sq km to generate the same $1 in revenue in the same 12 months. The "advantage" of having a larger archive is drastically misunderstood.

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