Tech

UBS Targets $13 for ASTS, Sees 50% Upside Potential

UBS sees AST Spacemobile stock rallying 50.8% with new $13 price target amid key partnerships and regulatory progress.

By Bill Bullington

6/10, 12:39 EDT
Amazon.com, Inc.
AST SpaceMobile, Inc.
Burlington Stores, Inc.
PagerDuty, Inc.
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Key Takeaway

  • UBS analyst Christopher Schoell raised AST Spacemobile's (ASTS) price target to $13, implying a 50.8% upside from Friday’s close.
  • AST Spacemobile's stock surged 284% in the past month, driven by partnerships with Verizon and AT&T and positive regulatory developments.
  • Despite high risks, AST's agreements with over 45 operators and recent funding progress bolster its market position.

AST Spacemobile's Potential Upside

Texas-based satellite manufacturer AST Spacemobile, which went public via a special purpose acquisition company (SPAC) in 2021, is gaining attention as a high-risk, high-reward investment. UBS analyst Christopher Schoell has increased his price target for AST Spacemobile's stock by $6 to $13, implying a potential upside of 50.8% from Friday’s close. The stock has already climbed nearly 44% this year and surged about 284% over the past month. A significant factor in this rise is a partnership announced in late May with Verizon, which includes a $100 million raise for AST in the form of commercial service prepayments and a debt investment. Additionally, AST has a deal with AT&T to provide remote coverage across the United States through 2030, demonstrating the company's ability to be carrier neutral.

"We still see ASTS as a high-risk, high-reward investment that is subject to various risks," Schoell said in a Monday note. "That said, recent partner deals, progress on funding needs, and positive regulatory developments give us increased conviction and we are increasing our estimates & valuation multiple."

Catalysts and Risks

Several catalysts could drive AST Spacemobile's stock higher, including the launch of its first five commercial satellites and the Federal Communications Commission’s (FCC) "Supplemental Coverage from Space" order, which became effective on May 30. This order allows collaboration between satellite operators and cellular network providers. AST currently has agreements with more than 45 operators serving 2.8 billion subscribers, up from more than 40 operators with about 2 billion subscribers earlier this year.

"Multiple players are targeting the space to cellular market, but we believe AST is well-positioned given its time to market advantage and ability to link unmodified devices using multiple spectrum bands," Schoell noted.

However, the stock faces several risks, including launch timing and the possibility of failures, regulatory issues, funding, and competition. Despite these risks, AST's partnerships with major companies like AT&T, Vodafone, Google, and Verizon lend credibility to its technology and financial footing.

Broader Market Sentiment

The debate around when the Federal Reserve will start to lower interest rates continues to influence market sentiment. Investors are closely watching macroeconomic data, including jobs market reports, to gauge the current state of the U.S. economy. Wall Street analysts are focusing on individual stocks that can thrive despite short-term pressures and deliver attractive long-term returns.

For instance, Burlington Stores impressed investors with its first-quarter results for fiscal 2024, leading Jefferies analyst Corey Tarlowe to reaffirm a buy rating and increase the price target to $275 from $260. Tarlowe highlighted the company's robust comparable sales growth and well-managed inventory levels.

Amazon also remains a top pick, with Tigress Financial analyst Ivan Feinseth reiterating a buy rating and increasing the price target to $245 from $210. Feinseth cited generative artificial intelligence-related tailwinds and Amazon's multi-industry leadership position as key factors.

PagerDuty, a digital operations management platform, reported mixed first-quarter results for fiscal 2025. RBC Capital analyst Matthew Hedberg reiterated a buy rating with a price target of $27, noting the company's steady annual recurring revenue growth and opportunities in its federal business.

Street Views

  • Christopher Schoell, UBS (Bullish on AST Spacemobile):

    "We still see ASTS as a high-risk, high-reward investment that is subject to various risks. That said, recent partner deals, progress on funding needs and positive regulatory developments give us increased conviction and we are increasing our estimates & valuation multiple."
    "Multiple players are targeting the space to cellular market, but we believe AST is well-positioned given its time to market advantage and ability to link unmodified devices using multiple spectrum bands."