No. of Recommendations: 1
Pikes2Peak asked for comments on SPACEHAB (Nasdaq: SPAB). After looking over
the information I received from the company, I really like what I see.

As stated in the company's annual report, SPACEHAB is: "The first and only
company to commercially operate habitable modules that provide space-based
laboratory research facilities and space station resupply services aboard the
U.S. Space Shuttle System."

The company sees its market in three segments:

1) Microgravity and Life Sciences Space Research. The company's specially designed
modules connect to the mid-section of the Space Shuttle and provide a habitable
research area to conduct microgravity research. Companies such as Upjohn, Eli Lilly,
Chiron and Kennametal have conducted experiments using SPACEHAB's modules.

2) Space Support Services. The company currently has a contract to provide logistics
support to the Russian Mir space station using the U.S. Space Shuttle. The next
SPACEHAB Mir logistics mission will be aboard the STS-84 shuttle flight in May 1997.
With the prospects for the International Space Station (ISS) program, logistics
support and payload processing could be a major area of growth for the company.

3) Space Infrastructure Development. The ISS will be a major project for the
international space community. The company sees opportunities "arising for the
commercial development of certain elements of the ISS infrastructure such as the
X-ray crystallography facility, a component of the robot arm that will be used to
assemble and manipulate elements of the space station, and attached platforms for
unpressurized research."

The company has no private-sector competition in the "pressurized module services"
it provides for the Space Shuttle. NASA's government-owned and operated Spacelab
provides some similar services, but NASA is ending the Spacelab program in early 1998.

Up until recently, SPACEHAB has been totally reliant on NASA programs, but with the
acquisition of Astrotech from Northrop Grumman in February (for $19 million in cash),
the company has expanded into the market of providing commercial satellite payload
processing services. Astrotech partners and customers have included Lockheed Martin,
McDonnell Douglas, Boeing, Motorola (Iridium), Orbital Sciences, and even the National
Oceanic and Atmospheric Administration. Astrotech had revenues of around $8 million in
1996, and seems to be a perfect strategic business fit with SPACEHAB.

According to First Call, the two analysts that follow the company have a mean earnings
estimate of $0.78 per share for fiscal year 1997 ending in June, and $0.94 per share for
fiscal 1998. (It should be noted that the two analysts have widely varying estimates:
$0.66 and $0.90 for FY97, and $0.83 and $1.05 for FY98.)

At the current share price of $6 1/2 and using the mean estimates, SPACEHAB trades at
only 8.3 times '97 estimates and 6.2 times '98 estimates -- very attractive PE multiples
considering those estimates project EPS growth of 20% between FY97 to FY98. Additionally,
the balance sheet is solid, and the shares currently sell for less than book value
($7.23 per share as of 12/31/96).

Management seems to be very savvy and has a record of keeping their eye on the ball.
The annual 10-K filing lays out the company's strategy very clearly, and the management
is well aware of the importance of investing in R&D to develop new products and
enhancements to existing products to meet anticipated customer needs.

Naturally, there is some risk here as well. What will be the future of U.S. space
program and the ISS program? Given that these are government operations, they are
always subject to political budget wrangling. Just recently, Russia has backed off of
its contributions to the ISS project. Also, as space programs continue to be
"commercialized," competition could heat up from major aerospace players such as Lockheed
and Boeing.

That said, I feel that given the very attractive valuation and great potential, SPACEHAB
is worth a very close look as a long-term investment in the future. I don't currently
own any SPACEHAB shares, but I may own some soon.

As always, do your own homework. Call the company's investor relations person and get
the very nice investors information packet -- the phone number is 703-821-3000. They
also have a website at www.spacehab.com (you can also request investors information there).

-Brian (TMF Hoops)
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