TLDR
- B.Riley shifted AST SpaceMobile (ASTS) from Buy to Neutral rating on Monday.
- Price target reduced 24% from $85 to $65 per share.
- Shares dropped 3% to $57.04 in morning trading.
- Growing competition from Viasat and Space42’s Equatys partnership raised pricing concerns.
- Consensus rating remains Moderate Buy with average target implying 56% gain.
Shares of AST SpaceMobile (ASTS) declined 3% Monday morning following a downgrade from B.Riley, which moved the stock from Buy to Neutral. The equity changed hands at $57.04 after the rating shift.
B.Riley analyst Mike Crawford simultaneously lowered his price objective to $65 from $85, marking a decline of approximately 24%.
Despite the reduced target, Crawford’s new figure still suggests roughly 14% appreciation from Friday’s closing price. He noted that the risk-reward equation has “swung back toward balance” in light of the stock’s recent momentum.
The rating adjustment doesn’t question AST SpaceMobile’s technological capabilities. Crawford maintains confidence in the company’s capacity to deploy a functioning broadband direct-to-device satellite network.
Instead, his concerns center on revenue potential. Emerging rivals in the space could limit AST SpaceMobile’s ability to set premium consumer pricing.
Emerging Competitive Landscape
Crawford identified the Equatys joint venture between Viasat and Space42 as the primary competitive concern. This partnership aims to deploy a constellation potentially reaching 2,800 satellites, with initial launches tentatively scheduled for 2028.
The venture continues seeking additional strategic partners. Crawford specifically highlighted Rocket Lab as a potential collaborator worth monitoring.
Rocket Lab currently controls 8.725 MHz of L-band spectrum acquired from Iridium. Should Rocket Lab align with Equatys, Crawford believes competitive pressure on AST SpaceMobile would intensify.
Such a large satellite fleet targeting similar end-users presents meaningful challenges. While still hypothetical, analysts typically incorporate these scenarios into their models proactively.
Crawford emphasized he needs concrete commercial data before returning to a bullish stance. Specifically, he’s awaiting figures on mobile network operator subscriber adoption rates and published service plan pricing structures.
These metrics remain unavailable at present. Until they materialize, he prefers a neutral position.
Recent Operational Milestones
This downgrade follows a series of positive operational developments for the business. AST SpaceMobile recently transported BlueBirds 14, 15, and 16 from its Midland, Texas manufacturing center to Cape Canaveral launch facilities.
The company also announced complete deployment of BlueBird 11. This milestone occurred approximately 35 days following the successful August 5 launch of BlueBirds 12 and 13.
Consequently, the technical and manufacturing aspects of operations continue progressing smoothly. The uncertainty revolves entirely around monetization and market demand.
AST SpaceMobile remains unprofitable currently. Trailing twelve-month revenue totaled $115.3 million, modest relative to the company’s $22.2 billion market capitalization.
B.Riley’s cautious outlook isn’t universally shared among Wall Street analysts. Berenberg recently launched coverage with a Buy recommendation and $92 price target, highlighting 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 clearly holds divergent views regarding the Equatys threat level.
According to TipRanks, ASTS holds a Moderate Buy consensus rating based on 6 Buy recommendations and 5 Hold ratings. The mean price target stands at $88.98, representing 56% potential upside from current trading levels.
Analyst price objectives span a broad range, from $50.80 at the low end to $115 at the high end. This considerable variance underscores ongoing debate about appropriate valuation.
In related developments, AST SpaceMobile has allegedly expressed interest in purchasing spectrum licenses from Grain Management LLC, a transaction potentially valued at $6 billion. These licenses would support direct-to-space wireless service expansion.
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