Deutsche Bank sees last week’s sell-off in AST SpaceMobile Inc. (NASDAQ:ASTS) as a buying opportunity.
On Monday, the bank upgraded the satellite broadband developer to Buy from Hold and kept its $93 price target, CNBC reported. The target implies about 82% upside from Friday’s close near $50.97.
- ASTS stock is climbing. See the real-time price action here.
AST shares rose about 5% to $53.49 in Monday morning trading. Even so, the stock is down more than 26% year to date and trades roughly 60% below its all-time high of $133.86, set in May in the run-up to the SpaceX (NASDAQ:SPCX) IPO.
Analyst Bryan Kraft said the pullback makes now “an opportune time to become more constructive.” He also called Friday’s sell-off “misguided.”
What Sparked The Sell-Off
AST fell 10% on Friday after SpaceX agreed to buy a nationwide low-band spectrum portfolio from Grain Management. SpaceX said the deal covers up to 14 megahertz of paired spectrum in the 800 MHz band.
Low-band airwaves get through walls, which is a weak spot for satellite service. SpaceX said the spectrum “addresses one of the key remaining technical gaps” in its plan to make Starlink Mobile a major U.S. carrier, CNBC reported.
Telecom stocks fell harder. AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) and T-Mobile US Inc. (NASDAQ:TMUS) closed down 9.8%, 8.8% and 13.3%, respectively,. Verizon had its worst session since 2002.
The T-Mobile Angle
Kraft’s upgrade rests mostly on T-Mobile. The carrier now uses Starlink for its T-Satellite direct-to-cell service. Now that SpaceX is lining up as a direct rival, Kraft sees a chance T-Mobile could move its direct-to-device business to AST.
A switch would give AST all three major U.S. carriers. The company already has deals with AT&T and Verizon.
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Government and Japan Catalysts
Deutsche Bank also cited a Space Development Agency letter supporting satellite testing. The bank sees it as evidence that AST’s government business is growing. In January, AST was named a prime contractor for the Missile Defense Agency’s SHIELD program, which is part of the Golden Dome missile-defense initiative.
Kraft also pointed to a possible Japanese project that is moving closer to approval. He said the deal could bring up to $1 billion in Japanese government funding for AST’s constellation.
Risks Remain
The SpaceX threat will take time to play out. The spectrum deal still needs Federal Communications Commission approval, and SpaceX plans to launch its cellphone service in late 2027. JPMorgan said it sees limited near-term risk to wireless incumbents because of the time and capital a ground network requires, Axios reported.
Deutsche Bank is not alone on the bull side. Last month, Berenberg started coverage of AST with a Buy rating and a $92 target.
The trade is a bet on timing. Bulls think AST can sign carrier and government deals before Starlink Mobile becomes a real competitor. If T-Mobile moves to AST, Friday’s drop could end up looking like a gift.
ASTS Stock Price Activity: AST SpaceMobile stock was up 4.86% at $53.44 at the time of publication Monday, according to Benzinga Pro market data.
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