Hawkeye 360 (HAWK) represents a "compelling" investment opportunity with an organic growth outlook of around 30% and margin expansion, RBC Capital Markets said in a Wednesday note.

The company benefits from a robust recurring revenue model as the leading supplier of commercial signals intelligence data and analysis to the US government, RBC analysts said. They expect margin and free cash flow improvement as Hawkeye benefits from new satellite technology and strong demand.

Hawkeye's international exposure is a positive compared with its peers, with sales providing better pricing and longer contracts. US sales should be boosted by increased platform opportunities, and customer expansion through the National Reconnaissance Office's Commercial Radio Frequency Capability Augmentation program, which was awarded last month, the analysts said.

However, the company has been dragged down by the broader de-rating of the defense tech sector, reflecting investor concerns about the spending of the US Department of Defense, the analysts said.

RBC maintained the company's stock rating at outperform and lowered the price target to $28 from $33.

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