Texas-based satellite manufacturer AST SpaceMobile is a risky — but worthwhile — investment, according to UBS. AST, which went public via a special purpose acquisition company, or SPAC, in 2021, is building satellites to provide a space-based broadband network to unmodified smartphones. Analyst Christopher Schoell increased his price target for the stock by $6 to $13, implying a whopping 50.8% potential upside as of Friday’s close. The shares have climbed nearly 44% so far this year, and skyrocketed about 284% over the past month. Aiding the stock’s rise was a partnership announced in late May with Verizon that effectively includes a $100 million raise for AST in the form of commercial service prepayments and a debt investment. This, along with AST’s deal with AT & T to provide remote coverage across the U.S. through 2030, provides evidence that the company’s business model can be carrier neutral, Schoell said. “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.” The analyst said he sees several other catalysts ahead for the stock, including the launch of AST’s first five commercial satellites and the Federal Communications Commission’s “Supplemental Coverage from Space” order that became effective May 30. The order allows collaboration between satellite operators and cellular network providers. Other carrier deals could also happen as AST’s business grows, he said. It currently has agreements with more than 45 operators that serve 2.8 billion subscribers, up from more than 40 operators with about 2 billion subscribers earlier this year, he noted. “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 said in the note. Still, the stock has several risks that could create uncertainties for the company’s path ahead, such as launch timing and the possibility of failures, regulatory issues, funding and competition. However, AST’s roster of partners, which includes AT & T, Vodafone, Google and now Verizon, lends credibility to the company’s technology and its financial footing, he said.
