UBS sees this space stock as 'high risk, high reward investment'

CNBC

4 hours ago

AST Spacemobile is a "high risk, high reward investment," according to UBS. UBS resumed coverage of stock in the satellite design and manufacturer with a buy rating on Thursday and raised its price target to $62 per share from $38. The firm's forecast calls for about 24% upside from Wednesday's $50.05 close. ASTS YTD mountain AST Spacemobile stock in 2025. Analyst Christopher Schoell pointed to the company's cash hoard of about $1.5 billion and a broader-than-expected government opportunity, coupled with potentially greater visibility into regulations, as reasons he's optimistic on the stock. "Along with billions of potential funding for satellite connectivity from various U.S. government programs (incl. Golden Dome, DoD's PLEO program, etc.) and rising European sovereign interest, we believe AST is in a stronger position to drive utilization on its constellation," the analyst said. "We also expect the revenue upside to flow through at high margin and now look for ~80% total EBITDA margins long-term (~75% prior), at the high-end of peers given low recurring opex and its wholesale business model," he added. AST has been on fire this year, soaring more than 143.2%. This week alone, the stock has jumped 10% after the company said it's nearing the launch of nearly 60 satellites that will power cell- based broadband networks . To be sure, there are risks to AST's outlook. "In a downside scenario, launch failures or delays push out the achievement of substantial coverage and/or competitive, regulatory and technology factors weigh on the company's ability to scale revenues and achieve profitability/positive free cash flow," Schoell said. The stock isn't widely covered, but the majority of those who do are bullish. LSEG data shows that six of nine analysts covering the stock rate it a buy, while the other three have a hold rating.