GeoEye, Inc. (GEOY)

PrincetonAl (< 20) Submitted: 6/12/08 6:19 PM : Start Price: $16.55 GEOY Score: 50.82

I've gone long this on the recent drop. Trading for less than book value of its Geoeye satellite, and presumably its poor recent quarter is not unexpected with some orders being held off on a runup to launch of the new bird.

Basically, on a successful launch, this should double by my estimation. Assuming, a 90% chance of successful launch, and 90% change of successful operation, you're looking at 80% chance of a double. (on the downside, it drops by half if launch / operations fail).

Obviously the binary nature of the outcome creates quite a barbell shape on the results) but I calculate a 70% return in 3 months in a company that is in a true duopoly with DigitalGlobe and very high barriers to entry.

(0.8 * 2 (a double) = 1.6 + 0.2 * 0.5 = 0.1, or a likely return of 70% )

I hold this one in my portfolio, including $500 of September 80 $30 call options picked up at 0.25 just as a bit of a flyer.

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