On Monday, UBS has adjusted its outlook on AST Spacemobile (NASDAQ:ASTS), a company specializing in space-based cellular broadband network technology, by increasing its price target from $7.00 to $13.00. The firm has reiterated its Buy rating for the stock.
The revision in the price target to $13.00 from the previous $7.00 comes as UBS acknowledges the potential high-risk, high-reward nature of the investment in AST Spacemobile. The decision is backed by a series of positive movements for the company, including recent partner deals, progress in meeting funding requirements, and encouraging regulatory developments.
UBS's raised price target reflects a heightened conviction in AST Spacemobile's prospects, spurred by a reduction in anticipated funding needs from the earlier estimate of $350-400 million to now between $250-300 million by the year 2025. This shift is partly attributed to the new agreement with Verizon (NYSE:VZ), which came as a favorable surprise against the backdrop of Verizon's previously reported ties with Amazon (NASDAQ:AMZN)'s Project Kuiper.
The agreement with Verizon also serves to validate AST Spacemobile's business model, demonstrating its carrier-neutral potential, which is supported by an existing agreement with AT&T that extends through 2030.
These developments have led UBS to enhance its long-term projections for the company, now estimating revenues of $1.1 billion and an EBITDA margin of approximately 60% by 2028, an increase from the former estimates of $950 million in revenue and a 55% EBITDA margin.
In other recent news, AST Spacemobile has seen significant developments in its strategic partnerships and financial outlook. The company's recent deal with Verizon, valued at $65 million, has led to an upward revision in AST Spacemobile's price target by Scotiabank. The firm raised the target to $12.90 from the previous $7.40, maintaining a Sector Outperform rating on the company's shares.
In addition to the Verizon deal, AST Spacemobile has also entered a substantial commercial agreement with AT&T. This partnership aims to deliver Space-Based cellular broadband services, marking a crucial step towards the company's commercial operations.
Recent earnings call revealed that AST Spacemobile reported $31.1 million in non-GAAP adjusted cash operating expenses for the quarter and a cash balance of $212.4 million. The company is also preparing to launch its first five Block 1 satellites in mid-2024.
These recent developments reflect the potential for AST Spacemobile to engage with global mobile network operators and capitalize on its innovative technology. However, the company has not provided specific revenue guidance for the first five satellites, and it is still in the early stages of securing necessary financing.
InvestingPro Insights
Following UBS's updated outlook on AST Spacemobile (NASDAQ:ASTS), real-time data from InvestingPro provides additional context to the company's financial health and market performance. With a market capitalization of $1.19 billion and a striking 1-month price total return of 281.42%, ASTS has captured the attention of investors. Despite the company's high Price / Book multiple of 13.38, indicating a premium valuation, ASTS holds more cash than debt on its balance sheet, which is a positive sign for investors concerned about financial stability.
InvestingPro Tips suggest caution due to the stock being in overbought territory and its high price volatility, which could indicate a potential pullback or consolidation phase ahead. Moreover, with analysts not expecting the company to be profitable this year and the anticipation of a net income drop, investors should weigh these factors against the company's recent positive developments and UBS's optimistic projections.
For those interested in deeper analysis and additional insights, there are over 10 additional InvestingPro Tips available for AST Spacemobile at Investing.com/pro/ASTS. Remember to use coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of expert financial data and investment strategies.
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