Key Takeaways
- B.Riley shifted its AST SpaceMobile (ASTS) rating from Buy to Neutral this Monday.
- The investment firm reduced its target price to $65 from the previous $85, representing a 24% decrease.
- Shares of ASTS declined 3% during early market hours, settling at $57.04.
- Analyst Mike Crawford pointed to intensifying rivalry from the Viasat-Space42 Equatys partnership.
- Despite the downgrade, consensus Street ratings remain at Moderate Buy with approximately 56% potential upside.
Shares of AST SpaceMobile (ASTS) retreated 3% on Monday following a downgrade from investment firm B.Riley, which moved its recommendation to Neutral from Buy. Trading activity showed the stock hovering around $57.04 in the wake of the announcement.
Mike Crawford, the analyst behind the call, simultaneously lowered his price objective to $65 from $85āa reduction of approximately 24%.
Despite the revised target, it continues to suggest around 14% potential appreciation from the prior Friday’s closing price. Crawford noted that the investment’s risk-reward profile has now “swung back toward balance” following the equity’s strong recent performance.
The rating change doesn’t reflect doubts about AST SpaceMobile’s technical capabilities. Crawford maintains confidence in the firm’s capacity to establish a functional broadband direct-to-device satellite network.
Instead, his concerns center on pricing dynamics. Emerging competitors entering the space could constrain the rates AST SpaceMobile can command from end users.
Emerging Competitive Threats
Crawford identified the Equatys joint venture between Viasat and Space42 as a primary competitive concern. This partnership plans to deploy a constellation potentially comprising up to 2,800 satellites, with initial launches possibly beginning in 2028.
The Equatys venture is actively pursuing additional strategic partnerships. Crawford specifically highlighted Rocket Lab as a potential collaborator worth monitoring closely.
Rocket Lab currently controls 8.725 MHz of L-band spectrum acquired from Iridium. Should Rocket Lab align with Equatys, Crawford believes competitive pressures on AST SpaceMobile would intensify considerably.
This represents a substantial number of satellites potentially targeting the same market segment. While still speculative, these scenarios are precisely what analysts attempt to factor into valuations early.
Crawford emphasized he needs concrete data before adopting a more bullish stance. Specifically, he’s awaiting information regarding mobile network operator subscriber adoption rates and actual service pricing structures.
Such metrics remain unavailable at present. Until they materialize, he prefers maintaining a neutral position.
Operational Progress Despite Downgrade
This rating adjustment follows several recent operational milestones for the company. AST SpaceMobile recently transported BlueBirds 14, 15, and 16 from its Texas-based Midland facility to Cape Canaveral for upcoming launches.
The company also announced the complete deployment of BlueBird 11. This occurred roughly 35 days following the successful August 5 launch of BlueBirds 12 and 13.
Consequently, the technical and operational aspects of the business continue advancing smoothly. The uncertainty revolves primarily around pricing power and market demand.
AST SpaceMobile remains in a pre-profit stage. Over the trailing twelve months, the company generated $115.3 million in revenueāa modest figure relative to its current $22.2 billion market capitalization.
Not all Wall Street analysts share B.Riley’s cautious perspective. Berenberg recently launched coverage with a Buy recommendation and $92 price target, emphasizing AST SpaceMobile’s first-mover advantage in space-based cellular broadband.
Similarly, Cantor Fitzgerald elevated its target to $90 while maintaining an Overweight stance. The analyst community remains divided on the severity of threats posed by Equatys and similar ventures.
According to TipRanks, ASTS holds a Moderate Buy consensus rating based on 6 Buy recommendations and 5 Hold ratings. The average analyst price target stands at $88.98, suggesting 56% upside potential from present levels.
Analyst price targets demonstrate significant variance, spanning from a floor of $50.80 to a ceiling of $115. This wide dispersion underscores ongoing uncertainty surrounding the pricing debate.
In related developments, AST SpaceMobile has reportedly expressed interest in purchasing spectrum licenses from Grain Management LLC in a transaction valued at approximately $6 billion. Industry observers view these licenses as strategically valuable for direct-to-space wireless connectivity services.
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