On Thursday, B.Riley raised the stock price target for AST Spacemobile (NASDAQ:ASTS) to $36.00, up from the previous target of $26.00, while maintaining a Buy rating on the stock. The adjustment follows a symposium where ASTS executives discussed the company's trajectory towards its inaugural commercial service.
This service is anticipated to commence approximately three months after the launch of the first five Block 1 BlueBird (BB) satellites. These satellites are slated for an early September launch, with plans for an additional 17 Block 2 BB satellites already in motion.
The firm's analysts project that AST Spacemobile will conclude the third quarter of 2024 with nearly $400 million in cash. This forecast includes $145 million expected from the forced conversion of de-SPAC warrants, as the company has announced it will redeem any outstanding warrants on September 27, 2024. This move is seen as a strategy to accelerate the deployment of the SpaceMobile constellation and hasten the time to revenue generation.
Moreover, analysts anticipate that AST Spacemobile has access to various capital sources to support its SpaceMobile constellation deployment. Potential funding avenues include sovereign funding from entities such as the U.S. Ex-Im Bank, pre-payment agreements with government and mobile network operator customers, and potential investment from the U.S. First Responder Network (LON:NETW) Authority (FirstNet).
FirstNet, which held a board meeting on August 21, 2024, has discussed investing in satellite to device technology in its upcoming fiscal year budget, earmarking $534 million for network enhancements to broaden coverage.
In light of these developments, B.Riley has updated its financial projections for AST Spacemobile. The firm increased its FY25 revenue and EBITDA estimates from $130 million and a loss of $37 million to $150 million and a loss of $19 million, respectively. The firm also indicated plans to release FY26 estimates following the successful orbit of the Block 1 BB satellites.
The revised stock price target of $36 reflects an enterprise value (EV) of $11.4 billion at the end of FY25, assuming conversion of in-the-money notes to common stock. B.Riley's analysis underscores AST Spacemobile's leading position in the race to provide direct-to-device (D2D) broadband connectivity.
In other recent news, AST SpaceMobile, a pioneer in space-based cellular broadband networks, has announced a significant redemption of its public warrants for Class A common stock. The redemption, priced at $0.01 per warrant, is set to take place on September 27, 2024.
The company's decision follows its achievement of a stock price condition, with the last sale price of the Class A common stock reaching at least $18.00 per share on twenty trading days within a thirty-day period.
Scotiabank has demonstrated confidence in AST SpaceMobile by raising its price target on the company's shares to $45.90, from a previous target of $28.00, while maintaining a Sector Outperform rating. This follows the company's announcement of the upcoming launch of its first five commercial satellites, known as BlueBirds.
Moreover, AST SpaceMobile reported Q2 2024 revenues of $1 million and an EBITDA loss of $34 million, aligning with analyst predictions.
The company has also made strides in operational advancements by offering a limited number of spots for its shareholders to witness the launch of the BlueBirds. This event marks a significant step in the company's journey to bridge connectivity gaps and provide broadband to unconnected regions. These recent developments reflect the ongoing progress and potential of AST SpaceMobile.
InvestingPro Insights
As AST Spacemobile (NASDAQ:ASTS) continues its journey towards launching its innovative satellite services, recent insights from InvestingPro paint a detailed financial picture for investors. With a market capitalization of approximately $4.39 billion, the company's financial health is underscored by its ability to hold more cash than debt on its balance sheet, an InvestingPro Tip that aligns with B.Riley's positive outlook on the company's cash position heading into the latter part of 2024.
Despite the company's ambitious growth plans, it's important to note that ASTS is trading at a high Price / Book multiple of 30.2 and a negative P/E ratio of -21.48, reflecting the market's anticipation of future growth rather than current profitability. This is in line with analysts' expectations, as another InvestingPro Tip indicates that the company is not expected to be profitable this year.
Moreover, the stock has experienced significant price volatility, with a one-week total return of -18.37%, yet a staggering six-month total return of 779.18%, highlighting both the risks and potential rewards for investors.
For those interested in deeper analysis and more comprehensive tips, there are 15 additional InvestingPro Tips available for AST Spacemobile, which can be found at https://www.investing.com/pro/ASTS. These tips provide further insights into the company's performance and potential investment considerations.
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