The news that Scotiabank telecoms analyst Andres Coello had downgraded shares in AST SpaceMobile to ‘Sell’ surprised the market. Oon October 8th came the news that US cellular giant Verizon firmly confirming it would start offering AST’s cellular service from space. AST’s shares surged 17 per cent as a result.

“Through our definitive commercial agreement with Verizon, we are working to deliver space-based cellular broadband coverage from space across the continental US,” said Abel Avellan, CEO at AST.

Avellan added that this deal will extend Verizon’s 850 MHz premium low-band spectrum into areas of the US that could get a coverage boost from AST’s space-based broadband offering. The agreement builds upon the companies’ strategic partnership first announced in May 2024.

But there was more. Bank of America (BoA) in a report for its clients, raised their target price on AST shares from $55 per share to $80. BoA said: “We reiterate our Neutral rating and increase our PO to $80 as catalysts for the story are closer to reality given management just shipped its BlueBird 2 satellite for launch.” AST shares were trading at $87 per share on October 8th and up an aforementioned 17 per cent on the day.

BoA listed what it believes are further catalysts for AST, and that it awaits further progress on AST, saying:

1. fully producing and subsequently launching its BlueBird satellite constellation;
2. successfully operating the constellation; and
3. capturing subscribers and turning them into revenue-paying subscribers before becoming more constructive on the story.

The $80 price objective is based on a Discounted Cashflow (DCF) analysis and supported by an EV/Sales/Growth multiple (vs. high growth software companies).

“We believe an DCF valuation is appropriate for AST due to the early stage, high projected growth, and outyear free cash flow generation timeline for the company,” added BoA. “Our DCF assumptions are for a Weighted Average Cost of Capital of 12 percent and terminal growth rate of approximately 9 per cent.”

AST is expected to see two of its ‘next-gen’ satellites launch this side of Christmas, possibly as early as November.

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Categories: Blogs, Business, Inside Satellite, Satellite

Tags: AST SpaceMobile, Verizon