AST SpaceMobile (ASTS) and Rocket Lab USA (RKLB) stocks fell sharply in Thursday midday trade, with ASTS dropping over 15% to lows last seen in December and RKLB declining over 10% to a three-month low. The declines occurred ahead of SpaceX's (SPCX) Starship test flight and followed Piper Sandler's initiation of coverage on all three space-sector stocks, naming ASTS its preferred pick. ASTS' drop also came after the company priced a $1 billion private offering of convertible senior notes due 2034 with an initial conversion price of $79.57 per share. Rocket Lab shares had slipped below their 200-day simple moving average on Wednesday. The space sector remains under investor scrutiny as companies compete in the emerging market for space-based services.
Piper Sandler Initiates ASTS Coverage With Overweight Rating And $100 Target
Piper Sandler initiated coverage of AST SpaceMobile with an Overweight rating and a $100 price target, implying roughly 75% upside from current prices of around $57 after the dip. The firm said it prefers AST SpaceMobile because of its "more palatable valuation" and a clearer path toward earnings expansion than other names in the sector.
Analyst Alexander Potter noted AST's direct-to-smartphone satellite network would likely drive the stock price higher, pointing out that the company has secured partnerships and equity investments from several of the world's largest mobile network operators. The company expects to receive approximately $983.6 million in net proceeds from the convertible notes offering.
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Piper Sandler Assigns Neutral Rating To RKLB With $83 Price Target
Piper Sandler initiated coverage of Rocket Lab with a Neutral rating and an $83 price target, representing about 22% upside from current levels near $68. The firm said Rocket Lab's Electron launch vehicle continues to dominate the small-payload market, while the reusable Neutron rocket represents the company's next major growth catalyst.
Piper Sandler added that Rocket Lab already trades at a premium to SpaceX and expects that valuation relationship to remain largely intact over the coming year.
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Piper Sandler Initiates SPCX Coverage At Neutral With $156 Target
Piper Sandler initiated coverage of SpaceX with a Neutral rating and a $156 price target, implying roughly 9% upside from current levels around $143. The firm told investors in a research note that the "emerging market for space-based services owes its existence to SpaceX."
However, Piper Sandler said that "idiosyncratic near-term headwinds" will likely cap upside in SpaceX shares. The firm cited staged lockup expirations and uncertainty regarding a potential Tesla acquisition as examples. It added that it will take time for the market to be convinced that SpaceX can deliver on its "truly game-changing approach" to launching orbital AI data centers.
SPCX stock traded flat in Thursday midday trade.
JPMorgan Maintains SPCX Overweight Rating Ahead Of Starship Test
JPMorgan said SpaceX shares could react to the outcome of the company's latest Starship test flight. The bank maintained an Overweight rating and a $225 price target, stating that the company's Starship remains central to SpaceX's long-term strategy despite individual test flights representing only incremental milestones.
FAQ
What happened to ASTS and RKLB stocks on Thursday?
AST SpaceMobile stock fell over 15% to lows last seen in December, while Rocket Lab USA stock dropped over 10% to a three-month low in Thursday midday trade. The declines occurred ahead of SpaceX's Starship test flight and after Piper Sandler initiated coverage of both companies.
Why did Piper Sandler prefer ASTS over other space sector stocks?
Piper Sandler named AST SpaceMobile its preferred stock in the space sector due to its "more palatable valuation" and a clearer path toward earnings expansion than other names. The firm initiated coverage with an Overweight rating and a $100 price target, citing the company's direct-to-smartphone satellite network and partnerships with major mobile network operators.
